Foreclosures are at an all time high; consumer debt is over $2.5 billion dollars and the rise in consumer bankruptcies is a disturbing new trend.  If you’re thinking about filing for bankruptcy, here is what you need to know.

1) Know the consequences
A black mark on your credit report is one consequence. This negative mark could stay on your credit score for seven to ten years. And that will lower your credit score, making it harder to secure a loan, apply for a job or get insurance. If you have a government job or a job that requires a high level of security clearance, your position may be in jeopardy. If you have a mortgage or a car loan you will still be responsible for making payments to your creditors even in a bankruptcy, otherwise those assets can be taken away. Most states exempt a certain amount of property that you can hold onto. If you have a bank account, stocks or bonds, CDs or mutual funds, all that can be taken away. However, IRAs, most 401ks, pensions or 529 plans are generally safe from creditors.

2) Gauge your eligibility
If these following scenarios are very familiar to you, it could be a sign that you should consider filing: if most of your debt is from credit cards or medical bills; if your total debt is more than you could pay over 5 years—excluding your mortgage and car loan; you have lawsuits against you or debt collectors are calling you all the time.

3) Know the rules
If you are facing foreclosure, declaring bankruptcy could delay the process. If you file for a Chapter 7 bankruptcy, where your debts are discharged off the bat, you won’t be able to save your home. Chapter 13 allows you to catch up on overdue payments you made before you filed, while keeping up with current payments.

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