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The number of Americans filing bankruptcy rose substantially last year. Many who sought relief were middle class Americans who lost jobs, saw their businesses fail, or found themselves facing foreclosure. Bankruptcy is never pretty, but it can provide a fresh start for those who need it.

NPR's Wendy Kaufman reports.

WENDY KAUFMAN: By the time Linda Frakes sought help from a bankruptcy lawyer, she owed about $150,000 on her credit cards. And the former corporate manager turned entrepreneur was getting deeper and deeper in debt. She tried to work out a repayment plan, but things did not go smoothly, and Frakes began to think that bankruptcy might be the only way out.

Ms. LINDA FRAKES: It wasn't something that I thought I would ever, ever, ever even consider let alone actually follow through with. It seemed like the scarlet letter to me.

KAUFMAN: The single mother in her 50s, who have been living an upper middle-class life in Atlanta, was both terrified and depressed.

Ms. FRAKES: Up until that point in my life, I really had defined myself by how successful I was and it was really, really difficult for me to come to the realization that I had gotten myself into this situation and wasnt able to figure it out. So to me the equation was I wasn't as smart as I thought I was.

KAUFMAN: Frakes, who's written about her late 2008 bankruptcy in a self-published book, owned several successful businesses. But market conditions changed and she couldn't sell them as she planned. She resorted to credit cards to keep herself and her businesses afloat. Then, the other shoe dropped someone who owed her a lot of money as part of a business deal quit paying.

Ms. FRAKES: What was left of the income that I was living off of disappeared and now I was scrounging just to pay daily living expenses, and that's when I became trapped.

KAUFMAN: Business failures are at the root of many personal bankruptcies, so are serious illnesses, divorce, a death in the family, and increasingly the loss of a job.

Some who turn to bankruptcy are simply deadbeats, but most are not says Seattle bankruptcy lawyer Gloria Nagler.

Ms. GLORIA NAGLER (Lawyer): Believe me, people do not come into my office and saying, whoopee, I get to file bankruptcy.

KAUFMAN: If they use Chapter 13 of the bankruptcy code, they sign on to debt repayment plans and in return get to keep certain assets. Those in more dire financial straits can try filing under Chapter 7 - assets are sold to pay off debts and what can't be paid is absolved.

Nagler says the would-be filers that she sees are often so embarrassed by their predicament they can't even look her in the eye.

Ms. NAGLER: I quickly, you know, let them know that it's not a moral failing. My God, the economy's falling apart all around us and there are so many people are filing bankruptcy I have twice the business, I can't even return all the calls, and every lawyer in town whose done bankruptcy is having the same situation.

KAUFMAN: Nationwide, personal bankruptcy filings rose to 1.4 million last year, about 30 percent more than the year before. And the number isn't likely to fall sharply any time soon.

In Seattle, for example, there are so many requests for free debtor counseling that the local bar association holds twice weekly sessions just for those considering bankruptcy.

Mr. JOHN FARVER (Lawyer): Hi, my name is John Farver and I can be your attorney tonight for half hour. I can give you any advice and assistance I can.

KAUFMAN: Over the next two hours, Farver and two other volunteer bankruptcy lawyers listen to stories like that of a well-dressed young woman who'd lost her high-paying job and her new position doesnt pay enough to cover her bills. Still, her wages are being garnished. Another woman, a scientist, had become ill and couldnt work for awhile. Then a sizeable contract she was working on got cancelled.

Mr. FARVER: So many people who have lost their job and all of a sudden, you know, can't afford what they easily could've afforded six months ago. Well, those people need to have their own personal bailout, you know, just like the fat cats on Wall Street.

KAUFMAN: In 2005 Congress overhauled the nation's bankruptcy laws intending to limit the number and scope of individual bankruptcy filings. But in this tough economy, the law has had limited effect, as huge numbers of Americans are legally shedding debt and hoping for a fresh start.

Wendy Kaufman, NPR News.

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