Financial challenges can sometimes be overwhelming because of accumulated debt. In such situations, many debtors are desperate to find a solution that can relieve them of debt with the least amount of harm done to their credit score. The two most common choices that people make in such situations is bankruptcy and debt relief through other means.

However, the method that a debtor chooses largely depends on the unique set of circumstances. Many people would agree that bankruptcy has long-term effects on a person’s credit standing and; therefore, financial experts suggest that it should only be considered as a last resort. Before the situation escalates to that point, people should try to obtain debt relief through other means.

One way of achieving that goal is by speaking with creditors directly and trying to agree upon a modified repayment plan. Another option is speaking with a credit-counseling agency, which, in turn, can have a discussion with creditors and prepare a debt repayment plan. In that case, a debtor would make a monthly payment to the credit-counseling agency and that agency would forward the payment to the creditors. There are many such credit counseling agencies in Wisconsin that either do this free of charge or for a minimal fee.

A debtor may also choose to start a second line of credit to repay the initial debt. However, that must be a well-thought-out decision because a second line of credit often requires the debtor to keep the person’s residence as collateral. Finally, if none of those options work, the individual debtor may file for bankruptcy either under Chapter 7 or Chapter 13 under the United States Bankruptcy Code. The advice of an experienced bankruptcy attorney can help those facing financial challenges understand what option may be appropriate in their situation.