The decision to file for bankruptcy is a major one for both individuals and businesses. Depending on the amount a debtor owes, the debtor’s status as an individual or a business entity, and the debtor’s creditors all influence a debtor’s options for debt relief and potential bankruptcy filings. While bankruptcy can ultimately be a beneficial option in some situations, any record of a bankruptcy filing could have implications for your financial future as a private individual or business owner.

Debtors can try to find non-bankruptcy financial workouts to handle their debts with minimal disruption to their financial futures. Filing for bankruptcy will help an individual or business discharge debts quickly but can make obtaining a loan more difficult in the near term. (If cash flow is a problem and you have already missed loan and/or credit card payments, this type of damage is likely already done.) Nevertheless, consider these alternatives to bankruptcy before deciding.

Debt Restructuring

A creditor may be willing to work with a debtor if maintaining the relationship in the long term is in the creditor’s best interests. Remember, debt renegotiations between debtors and creditors are voluntary exchanges; there is nothing stopping a creditor from eventually disagreeing with the restructured terms and pursuing payment of the debt in full. Restructuring could entail a change in payment amounts, interest rate, or the timeframe for the loan to stretch payments for a longer time.

Debt Settlement

Some creditors will be willing to agree to a lower settlement amount so the debtor and creditor can settle the matter and go their separate ways. If a creditor believes the debtor will never be able to repay a debt, the creditor may simply opt for settlement as a means of recovering something instead of nothing at all. A debt composition or settlement essentially means the creditor accepts partial payment to consider a debt paid in full.

Debt Consolidation

Be wary of companies offering debt consolidation as most often the consolidation simply replaces your existing debts with one large loan and a high interest rate and a longer term. Some debt consolidation companies are actually scam operations that prey on the vulnerable.  Never agree to pay a fee up front before your debts are settled.  This has become such a prevalent scam that the FTC made a law against it.


While this option is virtually nonexistent in the business world, some individuals may qualify for some types of debt forgiveness, either through government programs or with the approval of the creditor. For example, an individual may persuade a creditor to discharge a debt in the face of a severe medical condition or similar circumstances.

If you have amassed a mountain of debt and are unable to secure an out-of-court solution, bankruptcy is likely your best option. An experienced lawyer who handles debt relief matters will be familiar with Texas law and will be able to explain your options for bankruptcy, then negotiate with creditors and work with you on a fresh start.   Contact the seasoned bankruptcy attorneys at Law Offices of Bill F. Payne, P.C. today for a free consultation.