With the start of a new year, a lot of Americans are taking stock of their finances and looking for the best way to get out of debt. If your debt has become overwhelming and is affecting your ability to pay for everyday necessities, it may be time to consider bankruptcy.

You wouldn’t be alone. Personal bankruptcies in the U.S. have risen by 16% since last year. One thing that many of these folks have in common is that they waited longer than they should have. One law school professor and bankruptcy expert says that often “people are struggling with their debt for more than two years” before getting legal guidance.

Do any of these “red flags” sound familiar?

While bankruptcy typically isn’t (and shouldn’t be) your first choice for getting debt relief, you also don’t want to take drastic steps like emptying your retirement accounts or your child’s college fund or simply redistributing debt by getting a 0% interest credit card to transfer balances from other credit cards. These 0% cards come with strings, including eventually charging interest. Using payday loans and other methods of borrowing money just to pay bills and by groceries are also “red flags” that a person’s financial situation is not sustainable.

If things have gotten to the point where creditors are coming after you, it’s wise to explore bankruptcy. Dealing with collection phone calls, emails and letters is bad enough. If you’re looking at a wage garnishment by a creditor, repossession of your car or foreclosure of your home, it’s definitely time to get help.

Learn more about bankruptcy

Filing for bankruptcy isn’t a quick process. First, you’ll need to determine which type is right for you – Chapter 7 or Chapter 13. It’s important to find out more about both of those. 

The more you learn about bankruptcy, the more you may find that a lot of what you believed or were told wasn’t true. For example, while bankruptcy will affect your credit score, being deeply in debt has likely damaged it significantly already. With wise choices, people can rebuild their credit scores after bankruptcy.

If you’ve exhausted all other reasonable options for dealing with your debt, it’s time to explore what bankruptcy would mean for you and your family. Getting sound legal guidance is a good first step.