When facing financial problems, people often turn to bankruptcy as a way to escape mountains of debt that have become just too big to bear.  However, bankruptcy should never be a decision that is taken lightly and is a choice that brings with it serious consequences for a debtor’s current and future attempts to borrow money.  It could also affect a future job or job promotion—many companies check a potential employee’s credit report to ascertain if that employee is best suited for the position.  A bankruptcy could raise questions that a prospective employee is not prepared to answer in a job interview. 

Because of this financial and social stigma associated with bankruptcy, many debtors looking to solve their financial problems seek alternatives.  Debt mediation is one such alternative of bankruptcy, allowing a debtor to settle his or her debts without the harsh penalty that filing for bankruptcy brings to a credit score and (potentially) public image.  A bankruptcy stays on a debtor’s credit report for, in some cases, up to 10 years.  However, in the debt mediation process, a debtor may be able to fix a bad credit score by reaching an agreement with his or her creditors to remove late fees and outstanding interest on a debt.  A debtor may also be able to arrange payment terms that are more suitable to his or her budget, allowing both debtor and creditor to walk away satisfied with the outcome of the proceedings. 

Whether or not to choose bankruptcy over debt mediation will depend on the type of debt you have.  Unsecured debts are handled differently than secured debts in both debt mediation and bankruptcy, so only by looking at the specifics of your circumstances can a mediation attorney evaluate which option might be best for you.