This is one of the questions I’m asked frequently when I meet with an individual about their financial problems. The answer is always, “No, except as a final option and only if you can’t find another alternative that will work for you.” Unfortunately, for most people there isn’t another good solution. The prospective client will usually have already spoken with her creditors about the situation and asked for help such as a lowered interest rate or deferred payment. This is smart because you never know if a creditor will help unless you ask.
Still, the answer in many cases is, “No”. She may have inquired or even participated in a credit counseling or debt settlement program. But, if she’s meeting with me it’s usually because this option failed. Why? Because she either couldn’t afford the monthly payment or since she didn’t have legal protection from the creditors, one creditor has decided to continue with its collection activity (In fact, most of our clients are pushed into bankruptcy by just one or two creditors that refuse to work with them either directly or through a company). Now, depending on the creditor, she is worried and scared about garnishment of her wages, foreclosure of her home, or repossession of her car.
So unfortunately, for many people the final option is the best because Chapter 13 and Chapter 7 Bankruptcy provide legal protection from all creditors and can help in many instances where other options have fallen short.