Bankruptcy filings jumped 40 percent in 2007, after sharp declines from a year earlier when the new bankruptcy law made it more difficult to seek bankruptcy-court protection from creditors.

The new law, Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was first effective in 2006.

Even though the law makes bankruptcy a more difficult option to use, rising mortgage payments, job losses and other financial pressures pushed up the bankruptcy rate after more and more consumers found no other recourse, according to the American Bankruptcy Institute.

The Association of Independent Consumer Credit Counseling Agencies (AICCCA) says there's often an alternative to bankruptcy if consumers know the warning signs and seek help as soon as the red flags fly.

The association has developed a set of warning signs as a tip off to trouble ahead. If you experience two or more you should immediately seek help.

The warning signs are:

• Living paycheck to paycheck. Losing a job or a decrease in pay could be the final straw. Only a few months separates many consumers from a financial choke hold unless a quick change can be made to raise some cash or lower debt -- or both.

• No savings cushion. Americans' average savings rate is slim to none. If you spend more than you earn, an unexpected and costly change, say a divorce, major home repair or car expense, could cause severe financial trauma.

• Being under insured. A large portion of bankruptcies involve medical debt. If you can't afford the cost of an insurable incident without insurance, get insurance. If you lack insurance you also lack the wherewithal to cover sudden medical debt, home or car expenses and those other unexpected events.

• A non-mortgage debt-to-income ratio that is more than 20 percent. For those who spend more than 20 percent of their take home pay for non-mortgage debt, again, without a drastic change, financial frustration could become chronic.

• Making only minimum payments on credit cards. Paying only the minimum amount due means staying in debt longer and at a greater cost than is prudent. Those unable to make more than a minimum payment are at the mercy of even the slightest change in their financial condition.

If two of those red flags are signaling you, chances are you need financial counseling, assistance or both.

AICCCA and its members offer such counseling referrals. Other help is available from a host of other groups, including National Foundation for Credit Counseling (NFCC); NeighborWorks of America; Association of Community Organizations for Reform Now (ACORN); U.S. Department Of Housing and Urban Development; and local community and social service programs.

Published: January 23, 2008

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.