Suleman - also known as 'Octomom' - said that the move is best for her 14 children, including eight octuplets born in 2009.
Suleman told the Orange County Register in an emailed statement: "I have had to make some very difficult decisions this year, and filing [for] Chapter 7 [bankruptcy] was one of them."
> 'Octomom' Nadya Suleman on neglect claims: 'We were set up'
The 36-year-old - from La Habra, California - reports up to $50,000 (£31,000) in assets in federal court filings. This means that she owes more than 20 times her net worth.
Suleman's category of bankruptcy means that a court-appointed trustee would liquidate her assets to pay off creditors before she is discharged from most of her debts.
She owes money to her father, the city's water department, satellite company DirecTV and Whittier Christian School, where some of her children are students.
> 'Octomom' Nadya Suleman's car trashed: 'Leave California or die'
Suleman also owes more than $30,000 (£18,485) in rent payments on her four-bedroom house.
The home's previous owner, Amer Haddadin, claims that his own credit has suffered as he allowed the home to go into foreclosure proceedings by not making the mortgage payments and an auction that was scheduled for Monday (April 30) has been postponed for a week.
Suleman purchased the home from Haddadin under an all-inclusive trust deed three years ago and is said to have fallen behind on her monthly payments of $3,000 under their agreement.
> Octomom rejects offer to pay off house