Considering bankruptcy? If so, you may be wondering if you have to try a repayment plan before filing for bankruptcy. In most cases, the answer is no. New bankruptcy laws passed in 2005 require credit counseling before filing for bankruptcy. As part of this mandatory credit counseling, you must submit any repayment plan that the credit counseling agency develops to the bankruptcy court. However, you are not required to try the repayment plan before filing.

Even though you are not required to try a debt repayment plan before bankruptcy, it’s a good idea to consider debt negotiation, and debt repayment plans before pursuing bankruptcy. Bankruptcy is a “last resort” solution for people who have run out of available options. Establishing a repayment plan can help you manage your debt, budget your spending, and start making a dent in your total debt owed.

Most credit counseling agencies can develop a repayment plan for you. Likewise, financial advisors, accountants, and attorneys can also help you develop a repayment plan before deciding to file for bankruptcy. If you feel that a repayment plan could work for your financial situation, try one for awhile. See if you are able to meet your financial obligations and stick to the plan. If you are planning to file for Chapter 13 bankruptcy, you should understand that you will be forced to follow a court ordered repayment plan. Therefore, if you can develop and follow your own repayment plan, you may not need to file for Chapter 13 bankruptcy.

Developing your own repayment plan may involve negotiating with creditors for a longer repayment period, better terms, reduced monthly payments, or lower interest rates. If you’re not comfortable building your own repayment plan, consider having a credit counseling agency or debt settlement firm assist you in structuring a repayment plan. Repayment plans are a voluntary solution that can be very effective for a number of debtors. Consider developing and following a repayment plan before filing for bankruptcy.