Before a bankruptcy case can be filed, you must decide whether bankruptcy is, in fact, the best vehicle for dealing with the problems that you face. In a typical consumer bankruptcy case, most of the attorney's analysis involves comparing bankruptcy with other possible avenues of handling financial problems.

A necessary prerequisite to such comparison is a knowledge of all the relevant facts. Although it may sometimes be possible to rule out bankruptcy based on knowledge of only a few facts, it is never possible to decide safely to pursue bankruptcy without a thorough knowledge of the facts. Without such knowledge, unknown property (such as the right to a tax refund) may be lost in bankruptcy; major debts may turn out to be unaffected because they cannot be discharged or because there are liens on property; or property might be incorrectly valued and, as a result, lost to creditors.

To assess whether bankruptcy will help, take the following steps:

1. Learn the benefits and the pitfalls of bankruptcy. It is important to know the benefits and pitfalls of bankruptcy. While the benefits can be great – discharge of most debts and an automatic stay against creditors – there are disadvantages, particularly the possibility of losing property.

2. Will bankruptcy get rid of my debts? Bankruptcy does not eliminate all debts. If you have many secured debts or debts that cannot be discharged in bankruptcy, bankruptcy may not be the best option for you. Debts that cannot be discharged include taxes, alimony and child support and student loans.

3. Analyze you budget. Doing a budget analysis can help you determine whether you will be able to pay your bills after a bankruptcy proceeding. You need to calculate ongoing expenses and income to determine whether a bankruptcy proceeding will solve your debt problem of if the problem will continue. Your attorney should be able to assist you with this.

4. Will bankruptcy have any effect on my spouse? You might not be the only one affected when you file for bankruptcy; you also need to consider the impact bankruptcy will have on your spouse. While he or she will not be responsible for your individual debts, your spouse may have to pay for any joint-debts and joint property may be affected by the bankruptcy.

5. Consider bankruptcy alternatives. Bankruptcy is only one way to deal with overwhelming debt. There are other steps you can take to reduce your debt that don’t involve filing for bankruptcy.