A workout with creditors is simply a negotiation with your creditors for favorable terms of repayment of debt or outright forgiveness of debt. One problem with an out of court workout is that it requires you to be committed to a continuing  payment plan; regardless of your future cash flow.  Another problem is that creditors have to agree to voluntarily compromise the debt owed to them.  This is often the major roadblock to a workout.

Also, in a workout the lender may require either a large down payment  or additional collateral for the loan.  For instance, a bank may require that you pledge bank accounts, stocks or other assets to secure a workout loan.  Doing so gives them a better position if you cannot pay the workout loan amount.

Some people  use their hard earned retirement funds to pay creditors.  This option can be tricky and should always be discussed with an attorney before you commit to do it.  The risk is that you will exhaust your retirement funds and still need to file bankruptcy.  In bankruptcy, most retirement funds are exempt from creditors and you can keep them.