Bankruptcy is not the only method of debt relief, although it may in some situations be the best and most straightforward method with the most clearly foreseeable results. One thing remains clear: whenever one is behind in his or her debts - anything short of full repayment will have credit reporting consequences - whether bankruptcy, default negotiation, debt forgiveness or consolidation. With that understanding, let's explore some of these non-bankruptcy options.
One way to deal with debts you can't pay is to Default on them - that is, to just not pay them. If you are unemployed, your creditor may choose to simply write-off or charge-off the debt, reporting it as unpaid. In certain instances, this may be more economically advantageous to the creditor than incurring collection fees. If the creditor chooses to sue you and obtains a judgment, if you have no income or available assets to garnish, the judgment will sit unsatisfied for up to 20 years without detriment to you (provided that your insolvency continues) or benefit to your creditor.