Several readers suggested this article on bankruptcy myths. "Here's how bankruptcy affects your credit, your possessions and your karma. While the bankruptcy laws vary from state to state, every state has exemptions that protect certain kinds of assets, such as your house, your car (up to a certain value), money in qualified retirement plans, household goods and clothing."

"'For most people, they'll pass through a bankruptcy case and keep everything they have,' says John Hargrave, a bankruptcy trustee in New Jersey. If you have a mortgage or a car loan, you can keep those as long as you keep making the payments (like the rest of us)."

"'I'll never get credit again.' Quite the contrary. It won't be long before you're getting credit card offers again. They'll just be from subprime lenders that will charge very high interest rates."

"However, if you're planning to buy a house or a car, you might want to do that before you file. Those loans will be tough to get, and the higher interest rate on such a large purchase would make a significant impact on your payments."

The Associated Press. "Credit counseling agencies say that consumers are coming in in droves seeking help. 'My phones are going crazy,' said Howard Dvorkin, president of a nonprofit credit counseling service in Fort Lauderdale, Fla. 'Consumers are carrying an exorbitant amount of debt, and they don't have any savings to fall back on.'"

"The Federal Reserve's decision last week to raise short-term interest rates for the 17th consecutive time will boost yet again borrowing costs for consumers, likely prompting more delinquencies on credit card bills, as well as on auto loans and mortgages."

"Credit expert Catherine Williams said rising costs for gasoline and utilities were only part of the explanation for rising credit card delinquencies and increased consumer financial stress. 'People refinanced (their mortgages) six months or a year ago, so the 'house bank' is empty,' Williams said. 'Most can't go back and tap their home equity again.'"

"In addition, she said, consumers can only juggle debt payments for a while. As she put it: 'You let the car payment go one month, then the house payment. Then you make a lot of little creditors happy for one month, maybe for two months. Then it becomes obvious that you have to catch up on car payments, and everything else slides.'"