• If you can't pay your bills, bankruptcy can sometimes be your best option.Andrew Bret Wallis/Brand X Pictures/Getty Images
  
  Being in debt can quickly become a seemingly hopeless situation, especially if you suddenly find yourself unemployed or unable to work due to illness. There are a number of options for dealing with your debt and bankruptcy is often seen as a last resort. While filing bankruptcy can have a negative effect on your credit rating, there are certain circumstances in which going bankrupt may actually be the best solution for your financial problems.
  
  

Nondischargeable Debts

• Certain types of debts, such as student loans, back taxes, past due child support or alimony payments, cannot be discharged by filing bankruptcy. However, filing bankruptcy can help you to get caught up if you're behind on your payments. According to Nolo, filing a Chapter 13 bankruptcy petition can help you to restructure your child support, tax, student loan or other nondischargeable debts and repay them over a three-to-five-year period.
  
  

Lawsuit Protection

• Creditors are legally allowed to pursue you to collect a debt and one of the tools they can use is a civil lawsuit. If you are sued by a creditor for an outstanding debt and the court finds you liable, a judgment will be entered against you. Creditors can then pursue garnishment of your wages and bank accounts or seizure of your assets. According to Bankruptcy Law, you should consider filing bankruptcy if you are potentially facing a creditor lawsuit. When a bankruptcy petition is filed, the court issues an automatic stay, which bars your creditors from pursuing collections against you until the case is resolved.
  
  

Joint Debts

• If you co-signed a loan for someone or they co-signed for you, you are both jointly responsible for the debt in most cases. If one of you fails to make the required payments, the co-signer can be pursued for the debt and her credit can be damaged. According to Nolo, filing a Chapter 13 bankruptcy petition will offer your co-debtor protection against collection actions and it will allow you to repay the debt as originally intended.
  
  

Nonexempt Property

• In a Chapter 7 bankruptcy filing, you are allowed to exempt a certain percentage of your assets and the rest are liquidated and distributed to your creditors. If you have outstanding debts but want to keep your home, car or other nonexempt property, filing bankruptcy can help you retain them. According to Nolo, a Chapter 13 bankruptcy allows you to keep your property and use your income to repay your debts instead. The guidelines for nonexempt property vary by state, so you should consult your state's limits to determine whether this is a viable option.