In some situations, bankruptcy just isn’t the right solution for your problems. This is usually when real estate with large amounts of equity is involved. Generally speaking, you can exempt $20,000 ($40,000 for husband and wife) worth of equity in your residence. Anything over $60,000 of equity will start to cause real problems.

So what can you do? If you have the cashflow, you could propose a 100% Chapter 13 plan. You would be paying off your creditors in full, but it will be done under Bankruptcy Court supervision and will set a timeline, so you know when it will all be done. You could also do a cash-out refinancing to complete your plan sooner.

If that doesn’t work and you are over 62, you could also do a reverse mortgage. While this doesn’t pay off your debts directly, it would protect your home from creditors trying to take it and may free up enough money to do the 100% Chapter 13 plan.

Lastly, you could get a second mortgage or home equity line of credit, and negotiate with your creditors to settle the debt. This works best if you don’t have many creditors and the debts aren’t more than a year old. Generally speaking, you can usually get a 50% reduction in exchange for a lump-sum payment.