Debts can accumulate due to various issues. It could be high medical bills or other unforeseen circumstances that catch you when you are least prepared. When you are under an obligation to repay your debts and you are not in a position to, then you need to look for ways to get rid of the debt. You can talk to your creditors and negotiate how to repay them. Consulting with a credit consolidation company can also help. Your debts are consolidated into one lump sum and the creditors are repaid.

If all these alternatives bear no fruit, you always have the option of filing for bankruptcy. This is usually considered as a last option. You also need to understand the various kinds of debts. There are two types of bankruptcy debts. There are secured debts and unsecured debts. The debs that are secured are the ones that have collateral. Home and car loan are examples of these kinds of debt. This means if the debtor should default on payments, the creditors are permitted to claim the asset that has been secured against the loan.

Unsecured debts on the other hand, are not attached to any property or assets. Credit cards are a common type of unsecured debt. In this case, if the debtor defaults the creditors are usually at a losing end. They will have difficulty in claiming what is owed to them, since they have no back-up. They rely on the debtor's word and his repayment habits.

If you file for a chapter 7 bankruptcy, creditors may get little or nothing from you. This is because assets like your house or car are protected from these types of debts. The creditor has no right to force you to sell your house in a bid to recover what is owed to them.