If you have a great deal of credit-card debt, one thing you may be asking is if bankruptcy is the right option for you. Unsecured debts are typically discharged in bankruptcy, but there are a few things that you need to understand.

If you opt to have a Chapter 7 bankruptcy, then you need to give up a certain number of assets before your debts can be discharged. Declaring bankruptcy is a major decision and one you should not take lightly. There are steps that you should take before you decide if bankruptcy is right for your situation.

To start with, many people are able to negotiate lower interest rates or lower payments if they find themselves struggling to pay their bills. The lender is likely to prefer that you continue paying something rather than going through bankruptcy and getting the account closed for less money than they would have made otherwise. That’s why they’re likely to work with you instead of ignoring your request for help. However, not all lenders will agree.

If you do decide to go through bankruptcy instead of this negotiation process, your credit score will be impacted and a third-party trustee will go through your assets to determine if there are any that have equity and can be sold to pay down your debts. If so, then you’ll have to give up those assets, but that doesn’t mean you’ll lose everything. There are a great number of items that are exempt, so you can still keep items that would keep you from having to start over from scratch.