Q: A couple of months ago, Ilyce advised a radio listener that if they were unable to get a loan modification with their bank, that the listener might want to talk to someone at a reputable credit counseling service.

I’ve talked to a credit counseling service and have found out that I have too much debt to use their service, make too much money to obtain a loan modification using the Obama Plan and make too little to enable me to refinance my mortgage.

My debt-to-income level is too high. I’m trying to avoid bankruptcy and need to know what to do.

A: We hear frequently from homeowners who are trying to get loan modifications and are unable to obtain them from their lenders.

The whole loan modification process has been wildly ineffective. Only a small percentage of people that applied for loan modifications actually received a permanent loan modification.

The Obama administration originally described a process that gave homeowners the illusion that they would be able to get their loans modified if they made three on-time payments, only to work through the process and find out that there was no help that they could receive.

Many of the biggest lenders in the country have been unwilling or unable to provide any sort of meaningful help when it comes to loan modifications.

In your situation, you have to determine what you can do to help yourself. You seem to have at least some income so the question is whether your debts have simply gotten out of hand. If your debt levels have been constant but your income has dropped, you may find yourself treading water and looking for a lifeline.

If you have taken on too much credit card debt, student loan debt, and home mortgage debt are you still able to pay all at least the minimum due on all of these debts?

If your principal problem is trying to pay your home mortgage, you should think about selling your home. For some troubled homeowners, getting rid of the debt relating to their home can solve major financial issues in their lives.

It’s easy to see how selling your home and renting somewhere that’s far less expensive can help steady your finances.

If you have equity in your property, you can list your home for sale and try to unload it quickly. If you don’t have equity, you’ll have to do a short sale and work with your lender. (Some lenders have begun to realize that agreeing to a short sale is a far better idea than letting the home go to foreclosure, and hopefully yours falls into this category.)

You may not want to sell your home, but if it’ll allow you to have a fresh start, and avoid bankruptcy, it’s the right choice.

If your current situation has gotten so far out of hand that you can’t pay any of your bills, you’ll have to evaluate your options and determine which bills you can and will pay and which bills you won’t pay.

If you don’t pay your mortgage, you can expect your lender to file a foreclosure notice in a matter of months. If you can’t pay your credit card bills, your creditors will soon begin legal action.

While you’re current on your debt payments, most creditors won’t help you. Once you stop making your payments, your credit history will be tarnished and your credit score will drop.

If the non-profit credit counseling agency has told you that you don’t qualify for a debt management program, it probably means your debt (excluding your mortgage) is more than your annual income. That’s a commonly-used threshold for suggesting someone file for bankruptcy rather than enter a debt management plan.

But if you file for bankruptcy, you’ll be able to restructure your obligations or get rid of them entirely and have a fresh start. In three to five years, your credit history will be more or less rebuilt and in the meantime, you can work on establishing financial stability.

The good news about bankruptcy is that if you file your lender will stop any foreclosure action. You might even get a representative from your lender to show up in court and talk to you about how to make your loan work better for you.

So while you’re trying to avoid bankruptcy, it might make more sense for you to consider it. For more information about whether bankruptcy is the right choice, you can talk to a bankruptcy counselor through Credability.org, a nonprofit credit counseling agency affiliated with the National Foundation for Consumer Credit.