For a years bankruptcy has gotten a bad rap, a negative social stigma against people who have seemingly “given up” on their finances. In reality, modern bankruptcy is common and in many cases the best option for restoring a difficult financial state. In the United States we have both state and federal bankruptcy laws designed to give citizens a fresh start on their debt. You are legally allowed (and in some cases, encouraged) to take advantage of these laws to “wipe the slate clean,” so to speak. So how do you know if you are a good candidate for bankruptcy? Take a look at these guidelines:

You are facing lawsuits, wage garnishments or bank levies. If your debts have gotten to this state, you most likely have already considered bankruptcy, and if you haven’t it would be a good time to start.

Your creditors are threatening legal action. Oftentimes creditors can be very aggressive and add a ton of stress on your life. As soon as you file for a bankruptcy lawyer, the creditor calls will stop (or at least you can direct them to your lawyer, at which point if they continue harassing you, it will not look good for them).

Your income is not enough to cover your everyday expenses and make improvement on your debt. If you can barely survive paycheck to paycheck, you’re not making progress to paying your debt and are most likely digging a bigger and bigger hole with interest. Bankruptcy could be an option to try to get back on track.

Repaying your debts outside of bankruptcy would take you several years. Unless you have a structured long term loan, such as a house loan or car loan, taking several years to repay a debt will compound years and years of interest on the debt — which can often lead to a “1 step forward, 2 steps back” situation with your finances. Instead of struggling for years, it may be correct to file for bankruptcy.

Bankruptcy is probably now sounding like the golden ticket, so it is important to also emphasize the repercussions of filing for bankruptcy. It will stay on your credit report for years, and though in the long term bankruptcy generally helps people rebuild their already bad credit—in the short term it will really do a number on your credit. Which could impact job or housing applications, insurance or anything that requires you to be financed.

Credit Counseling may be required. In Arizona, for instance, completing a certified credit counseling course is required to file for bankruptcy. These credit services may be all that you need to regain your financial stability, and at the very least will help you not fall into the same hole of unpayable debt after your bankruptcy.

It is recommend to always discuss your situation with a bankruptcy attorney.