Bankruptcy is designed to give the honest but unfortunate debtor a new opportunity in life and a clear field for future effort, unhamered by the pressure and discouragement of preexisting debt.

The Bankruptcy laws are administered by the federal government, not the states.  The laws are designed to protect both debtors and creditors. In 2005 the bankruptcy laws were changed making it more difficult for a debtor to totally absolve himself from his creditors. A "means test:" was established which requires a person to "qualify" to file--especially a Chapter 7 bankruptcy, or complete liquidation of your debt. A person that does not qualify may be put into what is called a Chapter 13 bankruptcy, which is a reoragization of a persons debt, with a payment plan institued to provide a payoff of the creditors not liquidation of the debt.

Bankruptcy has serious consequences for a persons credit and should not be undertaken without careful consideration and really as a "LAST RESORT"! It will remain on your credit for 10 years, although the effects will gradually get less as the years go by and you can establish new credit.  Credit will be hard or impossible to get at first and will be much more costly if granted at all.

Once filed, bankruptcy causes what is called an "automatic stay", which is a court order prventing creditors from continuing collection efforts, foreclosure, reposession and most other legal procedings pending the bankruptcy trustee's analysis of the case.  Creditors can request release from this stay, but this must be granted by the Trustee and can take several months depending on the case and how quickly the trustee can deal with the request.  For this reason, it is often used to delay an imminent foreclosure sale relating to a person's personal residence.

Professional counsel should be obtained in deciding when and if a bankruptcy is advisable.  Be careful of CREDIT REPAIR SCAMS after you file--a bankruptcy is a public record and will continue to show up on your credit!  A person can not file again for 6 years after a bankruptcy is approved, so do not undertake it lightly--only if it becomes the only way out of your debts!