The cruelest recession since the Depression has pushed people who never would have dreamed of bankruptcy to ask themselves whether they dare file now.

Fear holds many back, as they worry their financial options will be ruined for life. But that is hardly the case, said Tara Twomey, a lawyer with the National Consumer Law Center. Bankruptcy has a stigma and can stay on a person's credit report up to 10 years, but "people drowning in debt can get a fresh start and go forward keeping their important assets," she said.

Bankruptcy lawyers say some people who are serious about putting their lives in order often can get a home loan two to three years after coming out of bankruptcy. Even credit cards are offered, though they carry interest rates that people should shun.

Experts agree that bankruptcy does not ruin your life, but they emphasize that those considering it should look into other options, including working out new arrangements with lenders.

(Experts caution that those in dire financial condition not wait too long to file. More on that later.)

Charge today, then repent

With 15 million people jobless and about one in four homeowners underwater on their mortgages, many people have learned that charging today on the belief that they can pay tomorrow is a dangerous trap. Following a lull in bankruptcies after Congress tightened rules in 2005, personal bankruptcies are increasing. According to the U.S. government, about 1.5 million Americans filed for bankruptcy in the 12 months ended Sept. 30, a 14 percent increase over the number who filed during the 12 months ended Sept. 30, 2009.

And studies show "people are in worse shape than ever" when they file, said Robert Lawless, who teaches bankruptcy law at the University of Illinois at Urbana-Champaign. Too many people wait until it is too late "and suffer more than they need to," he said.

Once a lender threatens to take your car or home, talking to a reliable bankruptcy lawyer is wise, Lawless said.

He emphasizes "reliable." Some ambulance-chasing bankruptcy lawyers take advantage of people worried about debt that is not truly unmanageable, and they push people into bankruptcies they do not need. Debt-counseling and debt-repair firms can take money from clients and not make payments to creditors.

A solution is to find out from a debt counselor whether you can handle debts by putting yourself on a strict budget. But do not go to firms that advertise or promise to get rid of your debts. Select one that gets funding from the United Way or a local government, an indication it has been scrutinized.

Do not wait too long

In bankruptcy, a person probably will be able to keep his or her home and car, but that is not a certainty. Some bankruptcy lawyers say that people who do not file for bankruptcy and unsuccessfully try to juggle an array of bills increase the risk that lenders will take back a car or home.

Bankruptcy features multiple rules, and they apply differently to Chapter 7, which tends to be for the deeply desperate, and Chapter 13, which gives people a three- to five-year payment plan.

The advantage of bankruptcy is that foreclosures, evictions, repossession, garnishment of wages or Social Security payments, utility shut-offs, and collection calls stop. Wait too long to file, and a legal judgment might eliminate options for saving an asset.

"Do not wait until the car is on the verge of repossession or two days before the home is foreclosed," bankruptcy lawyer Max Gardner said.

Once you file for bankruptcy, only debts you have had until then are relieved. Say you're unemployed and relying on credit cards for food and gas. If you file, the card companies might cancel your cards. But while you are in bankruptcy, you might get credit card offers because the banks might consider you a safer risk now that you have little or no debt and you cannot file for another seven or eight years. Remember that you will not get any relief for debts taken on after bankruptcy.

Gail MarksJarvis is a personal-finance columnist for the Chicago Tribune. E-mail her at gmarksjarvis@tribune.com.