You may not need to file for bankruptcy.

Chapter 7 bankruptcy is the neutron bomb of debt management and asset protection. A Chapter 7 is quick (a few months), and quite complete when it comes to wiping out unsecured debt like credit card and medical debts. You may want to save it for when you really need it–you can use Chapter 7 bankruptcy only once every seven years.

On the other hand, your particular combination of debt, income, and property may be a perfect fit for bankruptcy protection. The vast majority of people who end up filing for bankruptcy really do need it.

A lot has been written lately about whether bankruptcy makes sense for people, in light of the economic downturn, including these articles: