With home values falling and mortgage payments rising, many homeowners are in a desperate situation.

They can't sell. They can't refinance. And they can't make their monthly payments.

A growing number of delinquent borrowers are asking if bankruptcy is a way to save their homes from foreclosure. Unfortunately, for the great majority of financially strapped families, the answer is "no."

That's because bankruptcy judges are not allowed to:

• Reduce mortgage debt.
• Lower interest rates or payments.
• Force lenders to refinance your mortgage from an ARM to fixed-rate loan.

In other words, the loan you have going into bankruptcy will be the loan you have coming out of bankruptcy.

The only way a bankruptcy judge can help is to:

• Temporarily stop foreclosure proceedings while your case is in court.
• Give you time -- how much depends on the judge and your financial situation -- to catch up on your mortgage payments.
• Write down other debts so that you'll have more money available to spend on your mortgage.

That means bankruptcy can't be a long-term solution unless you have a mortgage worth keeping -- and therefore fighting for -- in court.

To see what we mean, answer these five questions:

Question 1. Did you do 100% financing?

If your mortgage was a no-money-down deal, it's likely that you have little or no equity -- the difference between what your home is worth and what you owe on it.

Question 2. Do you have to borrow money to meet your mortgage payments?

It doesn't matter where you borrow the money -- a home equity loan, payday loan, credit card cash advance or from a family member or friend. This indicates your payments are too large for your current income. If the only way you can make your mortgage payments is to charge necessities such as food, gas and clothing on your credit cards, count your answer as a "yes."

Question 3. Do you have an ARM?

If you have an adjustable-rate mortgage and can't make the payment now, the situation will only get worse with each rate adjustment. This is especially true if you have one of the exceptionally expensive subprime ARMs given to borrowers with bad credit. They typically reset to interest rates of 9% or more and account for the great majority of delinquencies and foreclosures we're seeing today.

Question 4. Is your home worth less than you paid for it?

If so, that reduces your equity -- the difference between what the home is worth and what you owe on your mortgage.

Question 5. Do you owe more than your home is worth?

Borrowers who financed 100% of their purchase, and therefore started with no equity in their homes, are particularly prone to be "upside down" on their mortgages.

If you answered "yes" to all or most of these questions, bankruptcy's not a good option.

That's because you have little or no equity to protect and a costly loan such as an option ARM, 2/28 or interest-only ARM that will be virtually impossible to repay no matter what you do.

Persuading your bank or mortgage company to restructure such a loan is the only long-term solution. Our step-by-step advice on how to avoid foreclosure tells you how to do that.

We won't kid you. It's a tough thing to do. In many cases lenders just aren't willing to work with you.

But a bankruptcy judge can't help.

Yes, a bill currently under consideration in Congress would change that, allowing judges to reduce the amount of a mortgage loan and lower the interest rate.

But Los Angeles bankruptcy attorney Leon Bayer says Congress and the White House are too beholden to the banking and mortgage industries to make such changes. Even if a miracle happened it would take months if not years to pull off, and that's not going to help you if you're facing foreclosure right now.

If you answered "no" to all or most of these questions, then bankruptcy may be your ticket. You have equity. You probably have a fixed-rate or more traditional ARM you could afford if other debts were lowered or wiped out.

Whatever your answers, we urge you to seek the help of a reputable credit counselor that belongs to the National Foundation for Credit Counseling, the nation's biggest and oldest credit-counseling organization.

Its 120 agencies abide by a set of professional and ethical standards that have served many individuals and families well over the past 50 years.

The fees will be modest and their experienced credit counselors negotiate with mortgage lenders every day. They'll know what's possible and whether bankruptcy makes sense for you.

Click here to to find a credit counselor, and then use the "Zip Code Search" to find one in your area. Click on the individual agencies to find everything from costs to office hours.

If you decide to go the bankruptcy route, the best way to find an attorney is to go to the American Board of Certification, a non-profit group that tests and accredits bankruptcy lawyers.

By Amy Buttell Crane

Interest.com Contributing Editor

Have a question about your finances. Ask us at editors@interest.com