When you're overwhelmed by debt, you may feel that there's no where to turn. Bankruptcy provides legal protection from harassment by creditors, and can help you restructure your financial life for a fresh start. If you are at loss for where to begin, this page will show you what in need to know when you are wondering how to file for bankruptcy.

Although it may be frightening, bankruptcy is actually a legal protection available by law. It is not a step to be taken lightly, however, and is definitely one situation where professional advice is essential. Before filing, you'll want to assemble detailed information about your financial position, and review everything with an attorney or credit counselor.

• This may be painful, but you'll need to open all those envelopes containing the bills you've been avoiding. Create two lists, one detailing all of your assets, and one list of everything you owe. The list of debts should include the name, address, and phone number of your creditors, the balance due, interest rate, and minimum monthly payment. Make sure to include all of your debts. Your attorney can help you go through and sort out which are eligible for bankruptcy protection and which, such as student loans, are not. Place all of this in a folder along with any supporting documents, such as credit card statements, and any correspondence you've received from your creditors.

• Although legally you can file for bankruptcy without support, this is not a situation which you would want to handle by yourself. Bankruptcy is complicated, and there will be decisions which need to be made, which call for experienced counsel. The attorney will also speak to your creditors on your behalf, which will minimize the endless stream of bill collection phone calls. Hiring a bankruptcy attorney will help ensure that you wind up in the best possible position after the case is resolved, but if you can't afford one, both federal and state agencies provide free credit counseling services that can help.

• Consumers have two avenues of bankruptcy available to them. You may be able to file under Chapter 7 of the U.S. Code, and have your assets sold and debts wiped out, or , if you qualify, you can elect to file under Chapter 13, and have the creditors accept a payment plan developed by the courts. There are specific criteria that must be met under each type of bankruptcy, and the decision, of which form to elect, should be made with the help of a bankruptcy attorney.

• In a Chapter 7 bankruptcy, also called liquidation, your assets are sold and the proceeds are given to your creditors to satisfy your debts. You are permitted to keep some personal items, such as clothes, your cars, and furnishings. What is exempt differs from state to state. As each state has different exemption levels, you need to select he state you will file in carefully. Most people need to file in the state they are currently living in, but there are circumstances, such as when you have been abroad, that may permit you a choice as to where to file.

• A Chapter 13 bankruptcy is sometimes referred to as a reorganization. In order to file for Chapter 13 bankruptcy, you must show the court that you have an income stream that will enable you to repay your debts. The court imposes a repayment plan that modifies the terms of your existing debt and schedules minimum payments that must be made to pay your debts off within three to five years.

1. In order to take advantage of Chapter 13, you must have income, and your debts cannot exceed $1,010,650 in secured debt and $336,900 in unsecured debt.
2. Chapter 13 bankruptcy can sometimes be used to avoid foreclosure.

• Once you have begun thinking about bankruptcy, stop using your credit cards. You can go to jail for taking on debt that you know you can't repay, and using your credit cards after beginning the bankruptcy process would qualify as taking on debt.

• Declaring bankruptcy entails preparing and filing paperwork, and appearing in court before a judge to get the settlement approved. Bankruptcy petitions are heard in federal court. Creditors cannot sue you or contact you to collect the debt during bankruptcy.

• Bankruptcy is a serious step, undertaken when all other alternatives are exhausted. After analyzing your situation, consulting with experts, and going to court, you'll have a plan that will allow you to start fresh without being hounded by creditors. It's important to comply with all the terms of the settlement, making all required payments on time.

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The content in this page is not a substitute for professional financial advice. Please contact your financial adviser before using the information presented here.