When is it time for you to head to bankruptcy court? Many people in the past filed bankruptcy when they could, in reality, pay off their debts with a little budgeting and frugal living. For this reason, the federal government passed new bankruptcy laws in 2005 and now it is more difficult to to file. However, for many consumers, filing bankruptcy is the only way out of their financial difficulties. So when do you know that you have come to that point?If you are relying on your credit cards to buy the basic necessities, such as groceries or utility bill payments, you may need the help of bankruptcy court. If bill collectors are calling you on a regular basis and you are struggling to make the minimum payments on your bills, bankruptcy court is likely a good choice. But the bottom line is that bankruptcy court is only helpful if you have come to the point that you truly cannot repay what you own with the money you can realistically make.Of course, when figuring out whether or not bankruptcy is in your future, you need to consider your assets. Your retirement savings, cars, real estate, or other investments are considered liquid assets and can be used to repay debts. If you still cannot repay your debts even after considering your assets, you may need to file.At this point talking to a bankruptcy lawyer would be a good idea. The lawyer will have the experience necessary to look at your financial situation and determine if you could benefit from filing. Keep in mind that heading to bankruptcy court will have a lasting affect on your credit rating. Finding a way to pay off your debts outside of the courts is a far better solution.