You might have spotted some signs that you're headed toward a deep financial hole. You've been skipping payments on your mortgage or car loan or maybe you've been maxing out your credit cards. Repeated calls from creditors demanding their money might tell you something, too.

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A low credit score would seem to be a strong hint, but it's not always a good gauge. Barry Paperno, manager of consumer operations at Fair Isaac Corp., a leading developer of credit scores, says consumers who file bankruptcy can have very different credit histories with a wide range of FICO risk scores at the time they file. And they can be affected in very different ways.

"The degree of the effect on each consumer will vary depending on other factors evaluated by the FICO score, such as the length of credit history, amount of credit obligations paid as agreed, other delinquency/derogatory items, amount of credit used, types of credit used and search for new credit," he says.

Attorneys say that if you do have to file bankruptcy, preparation and timing are extremely important, especially with the new provisions in the law such as the Chapter 7 bankruptcy "means test," which determines a consumer's disposable income.

"You need to average the income over the prior six months," says Marc Stern, co-chair of the Bankruptcy Committee of General Practice solo division of the American Bar Association. "If the debtor lost a high-paying job, the longer between the job loss and filing the better. The wait probably presents a more factually correct analysis of the debtor's situation.

"There are other factors: If a medical problem has not been stabilized, there is no reason to file, or, if anything, file a 13. It can be dismissed or converted at a later time. If the debtor is not employed, why file? There is usually nothing for a creditor to pursue. Wait and file shortly after they get a job."

But don't wait too long to seek help, especially if you are faced with a legal action such as a mortgage foreclosure, car repossession, wage attachment or an inevitable loss of property.

Also, be extremely mindful of your spending. Monitor your use of credit cards. The American Bankruptcy Institute advises that once you've decided to file bankruptcy, stop using the cards.

Experts warn that anything you purchase knowing you won't pay is considered fraud under the bankruptcy law and that debt won't be discharged. Buying luxury items such as a high-definition television or services like a day at the spa and/or taking out cash advances within two or three months before you file won't be discharged, even if, at that time, you didn't think you would file.

So, the decision is made. You believe filing a Chapter 7 liquidation or a Chapter 13 repayment plan bankruptcy is the best move to eliminate your mounting debts and end constant calls from creditors. What's next?

Gather financial documents
The new law has added a series of provisions to tighten loopholes by requiring more paperwork. A case can be dismissed for failure to provide all required documents and information. So an organized pile of essential documents not only smoothes out a very detailed process but also saves time and most importantly, money. Prepare a list of assets, debts, income and lawsuits, and put together all financial documents such as pay stubs, receipts and tax returns relevant to the list.