If you are looking for relief from unmanageable debt, you have several options—but not all of them are created equal.
When bankruptcy laws were changed in 2005 to prevent fraud and abuse, "alternative solutions" began to emerge, eventually forming an entire industry. There may well be circumstances that merit an alternative, and even a superior solution to bankruptcy, but many of these solutions either don't offer relief, and in a worst case scenario, lock people into even further debt. They include:

Loan modifications — Businesses that offer this solution require processing fees and often aren't affiliated with federal programs, making them a tenuous option at best. To make things worse, their approval rate is less than 20 percent.

Debt consolidation — This option is tantamount to financial suicide. This creates a secured debt (which can't be discharged) against a house to pay off unsecured debts and replaces various debts with one monthly payment that may or may not be manageable.

Debt settlement — This solution depends upon with whom you are working, but it usually results in one creditor being paid at the expense of other creditors, resulting in late fees and a damaged credit score. To make matters worse, many of these agencies pay themselves prior to providing debtor benefit, while others make false promises.

Mortgage workouts — Banks and mortgage companies are not obligated by law to help. A refinancing of a house is usually only available if it benefits a lender. If you are facing foreclosure, some lenders will "consider" a workout request to modify a home loan while continuing a foreclosure proceeding.

It's important to point out that individuals who file bankruptcy are federally protected. As a lawyer, I've helped hundreds of individuals educate themselves on options for debt relief. If you have questions, I'm ready to work with you toward an ideal solution.
To discuss any aspect of loan modification and bankruptcy alternatives in New York in a free initial consultation with Nassau County attorney Scott R. Schneider, call 516-433-1555 or e-mail him here.
I am a federally designated debt relief agency. I help people file for bankruptcy relief under the Bankruptcy Code.