A souring economy is responsible for many of today's bankruptcies, Herman says.
"Loss of a job or a reduction in income is right now probably one of the biggest driving factors in filing bankruptcy," she says.
"Though someone's income may have dropped or gone away entirely, their debt has not."
Even after finding a new job, it may be difficult to catch up on mortgage or auto loan debts, she says. This is particularly true if the new job pays significantly less than the old job.
Herman says some people are best off turning to a Chapter 13 debt consolidation bankruptcy. This spreads the debt out over time, allowing the consumer to "catch up while in an administered program designed to get them back on track."
Bankruptcy sometimes can also bring a halt to lawsuits or garnishments "in a quick and cost-efficient manner," she says.
"Garnishments can pull a significant percentage of a person's income away before they even see it," Herman says.
"A bankruptcy will stop a garnishment and allow the filer to function on their full income, and any money that is taken out after filing a bankruptcy will be returned to the client, though it may take some time."