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If you feel like you’re hopelessly buried in debt and you have very few assets, filing for bankruptcy may not be the answer to ending your financial problems. In fact, it may make them worse.

If you’re unemployed, on public assistance, have little or no money in a bank account, don't own an automobile, or rent or live with others, filing for bankruptcy may do little to improve your financial situation. If you’re already behind on payments to your creditors under these circumstances, you may not even need the protection bankruptcy may provide.

Creditors can’t strip you of your living necessities and can’t collect any money from you to pay off your debt if you don’t have it. They could try to sue you but will be wasting their time if you can’t possibly pay them. Additionally, any public assistance you may be receiving is untouchable by creditors.

If you don’t own a home or car that could be seized to pay off your debts, creditors have even fewer options available to them to collect on your debt. They can’t send someone to remove your personal belongings and can’t even get you sent to jail for failing to pay off your debt. You only risk a jail sentence if you neglect to pay taxes or child support.

As crazy as it may sound, if you find yourself barely scraping by and you have no assets that could be seized, don’t do anything about your debt. If you can’t afford to pay your debts any longer you should at least focus on paying your living expenses. Bankruptcy may cost you hundreds of dollars that you simply can’t afford in your present financial situation.

Bankruptcy may also be more damaging to your credit report than missing payments to your creditors. A bankruptcy will put a black mark on your credit report for 7 years under Chapter 13 bankruptcy or 10 years under Chapter 7 bankruptcy. Any unpaid debts not wiped away by bankruptcy will be automatically considered uncollectible after several years and should be taken off your credit report in 7 years.

In the years you may wait for your debts to be considered uncollectible, you may find yourself dealing with a lot of angry debt collectors. Although filing for bankruptcy can help get these people off your back, filing for bankruptcy isn’t the only way to stop their harassment. The Fair Debt Collection Practices Act (FDCPA) and several state laws are already set in place to protect you from abusive and harassing debt collectors. Contact the attorney general in your state if you think debt collectors are illegally harassing you.

Before you have to deal with debt collectors, try negotiating with your creditors directly. If you can convince your creditors that you may not be able to continue making payments you may be able to negotiate for lowered monthly payments, lowered interest or even paying less than you owe to wipe out your debt. Most reasonable creditors would prefer to collect a partial debt owed instead of nothing. If you can afford to make the agreed upon payments you could save your credit rating as well as your finances.

Bankruptcy is just one of several options available to you if your finances are on the verge of collapse. You will have to determine if bankruptcy is right for your own particular situation and, if not, what you need to do to get your finances back on track. The decisions you make will impact your financial future for many years to come.