One of the more frequent questions we seem to be getting these days is about how to discharge debt through bankruptcy even if you have a lot of equity in your current property.

One woman wanted to go through bankruptcy to get ride of £25,000 worth of debt and had £55,000 of equity in her home. She had decided that she couldn't take it anymore and had enough trying to make ends meet each month.

I can certainly understand the fear, panic and stress associated with feeling deep in debt but going bankrupt with a lot of equity in your home, is not only not smart, but for the most part, not possible.

In this particular case she could sell her home and payoff the debt that was bothering her. While we would all like to keep that equity, it is an asset that we own that is good and valuable and that could be liquidated to eliminate the debt without bankruptcy.

The most common argument that I hear from others in a similar situation is that it would be more expensive or the same cost to let a property in their area so they don't want to sell. The problem is that in order to access the equity in the property there are really only two choices; either sell the property or refinance it. In a down real estate market or if you have been struggling with bills, refinancing may not be possible.

So that leaves us in a difficult situation. This person does not want to sell, can't go bankrupt without potentially losing the house, and has no other way to retire the outstanding consumer debt.

The lesson to be learned here is that while there may not always be a 'perfect' solution, there is generally a solution and if this property had no equity in it, well then the situation would be different and bankruptcy would be a real option worth considering.

Getting out of debt is not always about making the best choice but about making the least objectionable choices. In this case maybe that would be to downsize her life, sell her house, payoff her debt and start a new financial like with no debt, no stress and for once in a long time, a positive outlook for tomorrow.