Bankruptcy as a solution to debt relief should, for the most part, be the absolutely last resort to repairing your financial problems. Before you jump the gun and file for bankruptcy because you have too many bills you can no longer afford to pay, you should explore you options such as debt consolidation and credit counseling before seeking assistance from a bankruptcy lawyer.

Is Bankruptcy the Answer?
In some cases, filing for bankruptcy is not the best alternative. While you can't have too much debt in order to opt for bankruptcy, the reality is that many debts cannot be discharged by filing bankruptcy and in the end; you are better off paying your debts off through a consolidation arrangement.

The types of debt that can be discharged will depend on the type of bankruptcy you file. For instance, individuals who file for Chapter 7 bankruptcy will be eligible to discharge credit card bills, medicals bills, and other types of unsecured debt. With Chapter 7 bankruptcy, you will not be able to dismiss debts including your car loan, mortgage, child support payment arrangements, or late tax payments.  Also any debts you have accrued under fraudulent activities will not be allowed to be discharged. Filing for Chapter 13 bankruptcy, any unsecured debt owed to the creditors after a payment plan has been established will be eligible for discharge, including tax debts and other debts ordered during a decree of divorce.

Bankruptcy as the Last Resort
Bankruptcy is considered to be a last resort option because it is expensive and can be detrimental to your credit history for the long term. The effects of a bankruptcy will stay on an individual’s credit report for 10 years or more. Bankruptcies can also take a lot of time. With Chapter 7, it can take 4 months or more and with Chapter 13, it can take up to 5 years.

While you may not have too much debt to be eligible for bankruptcy, an individual may have too much of the “wrong” kind of debt for bankruptcy to be an effective measure of repairing your financial situation. Debt consolidation or debt settlement may be a better option for you to pay off debts in a reasonable amount of time, without the big impact on your credit report. You can make arrangements for payments that you can afford and still stop the collection calls and the potential for additional accumulation of fees and potential legal action.