Options exist for debtors that do not involve filing for bankruptcy. Alternatives to bankruptcy are something that unsecured creditors are more interested in than secured creditors, as unsecured creditors have no means of recovering debts except those to which the bankrupt agrees. The alternatives include:

These options should be thoroughly explored with a solicitor, accountant or financial adviser before a person voluntarily enters bankruptcy. A bankruptcy trustee can also help to advise you.

Informal Arrangements

Informal agreements with creditors should be the first option considered by debtors and will usually be suggested by a financial counsellor or, perhaps, an accountant or solicitor. Informal arrangements cost less to administer than more formal arrangements but will not work unless all the creditors agree. If any creditor chooses to take recovery action, rather than agree to an informal arrangement the proposal will be unworkable. If informal agreements are going to be supported by creditors it is important that they set out to achieve realistic goals, as well as being done as soon as is practicable after the debtor is unable to meet their monthly commitments. Generally, once a creditor has commenced recovery proceedings it will usually be too late to put forward an informal agreement as an alternative.

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