You get collection notices in the mail nearly every day. You hate to answer the phone, afraid that it's another bill collector. It's time to take some action and get rid of the stress. You've toyed with the thought of filing for bankruptcy, but are still unsure if that's the way to go. Here are the typical approaches you have of dealing with your debt and how they stack up to the bankruptcy option.

Deal with the Creditors Yourself

You could call all of the businesses to which you owe money and explain your situation. Most will offer to setup a minimum monthly payment with you that you can afford. You may be able to negotiate to have some of the late fees taken off of your account. However, people find this unnerving and don't have the negotiation skills to get a better deal.

Hire a Debt Counselor

You could hire a financial specialist to write letters and make the phone calls for you. These people understand how to talk with creditors to get you a good deal. Sometimes a business will respond more favorably to a debt counselor call than from the individual account holder. In this option, you'll continue to make monthly payments to each creditor.

Use a Debt Consolidation Service

If your income is just not going to cover your bills and leave you anything to live on, debt consolidation may help. This service will work with you to find out what you can afford to pay on all of your accounts. They will then contact your creditors, negotiate a lower interest rate for you and offer them the monthly amount that you can pay.

Creditors will work with a debt consolidation service in order to get something paid on the account as opposed to nothing from you directly. When the arrangements are all in place with the creditors, you'll make one monthly payment to the consolidation service and they will distribute the funds.

These services have complicated contracts that you need to read closely. There can be expensive penalties for missing a payment to them.

Filing for Bankruptcy

If your financial situation is that you'll spend years paying off your debt with little opportunity to advance, bankruptcy is the option to look at. A chapter 7 bankruptcy attorney will handle everything from filling in the proper forms to filing them with the court. You'll provide the attorney with the income and expense information they need to complete the process.

The bankruptcy court will assign a trustee to your case. They will look over your assets and determine if you have anything that could be sold. Additional cars and luxury items such as boat and a second home may be sold off for cash. The trustee then determines how the proceeds should be distributed to your creditors.

When the bankruptcy is finally completed, or discharged, in your favor, the trustee notifies the creditors what they will get, if anything. You now have a clean slate on which to begin building up a good credit rating.

If you feel like you're going to be paying on your debts forever with one of the other options, talk to a bankruptcy lawyer first. A bankruptcy will take away the stress of dealing with the overwhelming debt each month.

For more information, contact a firm like Sever Law Office.