With the passing of the boom years and the entry into more recessive times, many people are finding life financially impossible – crushed by the wieght of debt taken on in the good years. No amount of loyalty to any financial institution has vlaue any more – they simply want their money. By declaring yourself bankrupt you can wipe away your debts and rebuild your financial position.

It is vital however, that you treat bankruptcy as an absolute last resort and examine every possible means of avoiding it. Indeed, under the Bankruptcy Abuse Prevention anhd Consumer Protection Act 2005, any individual must undergo proper consumer credit counselling before 180 days have passed since filing.

Having attended councelling, if bankruptcy is considered to be the only option, the following steps have to be taken:

Firstly, you have to decide which type of bankruptcy you are going to file under, the two most common being chapter 7 and chapter 13. Chapter 7 is often seen as the preferred option, but under the new BAPCPA rules, all applicants for bankruptcy have to undergo a means test, the result of which often forces individuals into chapter 13.

The second thing to consider is legal representation. Ironically, declaring yourself bankrupt is not an area where you want to save money. Lawyers are not cheap, but it is highly recommended that you hire one, and make sure they are aware of the laws in your state.

Thirdly, your application for bankruptcy can be quashed if you use your credit cards after filing for bankruptcy, due to the fact that you are running up credit that by definition (bankruptcy) you know you can't repay.

Once your case has been filed, you are protected by what is called "automatic stay". This means that no creditor may contact you regarding any debt. They may only approach your lawyer which means you will be left in peace.

A meeting of creditors, which you have to attend, will be called shortly after filing for bankruptcy. This last about ten minutes and you are questioned, under oath so that the truth of your financial statement can be proved. Beforehand you will have submitted a list of creditors and your personal assets.

The trustee then arranges liquidation of your assets with the proceeds used to pay off as much debt as possible. Once this has been done you are no longer liable for any debt left over. Approximately 60 days later you will receive notice of discharge. This is the case for a chapter 7 bankruptcy.

Chapter 7 and chapter 13 are different in that chapter 13 is a repayment plan. Creditors are repayed over 3 – 5 years (amounts and time are determined by the BAPCPA means test), and discharge notified some 60 days after the last payment has been met.

For more free information on bankruptcy visit www.declaringyourselfbankrupt.org where you will find a lot of useful information and advice on declaring yourself bankrupt. Get a totally unique version of this article from our article submission service