Q: My credit card debt cuts into the food budget. How do I know if I should join a consolidation program or file bankruptcy

A: I've had scores of bankruptcy clients who have voiced deep regrets about debt consolidation groups.

Only a federal bankruptcy court, not any state court and certainly no debt consolidation group can provide a legal discharge of debt.

And with certain limited exceptions, no bankruptcy court can discharge a perfected lien, and it is exceedingly difficult to discharge an educational loan.

Your best path is to provide a full disclosure of debt and assets, with detail, to an experienced bankruptcy practitioner authorized to practice in the federal courts in your State to determine your best choices.

A: Consult a bankruptcy lawyer and let him evaluate your entire financial situation before you decide.

A: It sounds like you’re juggling a lot right now, and deciding between debt consolidation and bankruptcy is a big choice. Since your debt is cutting into essential expenses like food and rent, it’s important to take a step back and assess the options. Debt consolidation could help by rolling all your payments into one monthly bill, often at a lower interest rate. This might make your payments more manageable, but you'll still need to have enough income each month to cover the consolidated payment.

On the other hand, bankruptcy could provide more immediate relief by potentially wiping out some or all of your debts. However, it comes with consequences like a negative impact on your credit score for several years. Given your current financial situation, it might be worth considering Chapter 7 bankruptcy, which could discharge unsecured debts like credit card balances. This would give you a fresh start but may impact your ability to borrow money in the future.

Before making a decision, consider whether debt consolidation would give you enough room to cover your basic needs, or if bankruptcy would provide the relief you need to focus on work, school, and car repairs. It might be helpful to talk to a financial advisor to explore all your options in more detail.