If you have found in the recent past that you are drowning in debt and do not know where to turn, you can fight your way back to the surface and try to get out of debt on your own or, you can declare personal bankruptcy.
If you find this is necessary because you can no longer pay your bills as agreed, it offers you legal protection from your creditors. When your case has been filed and is pending, your creditors cannot sue, repossess the property, or garnish your wages to collect what is owed. Once the process is over, you no longer legally owe the bills included in this filing.
There are a couple of ways to do it. You can declare personal bankruptcy by filing a Chapter 7 which forgives all debt except for taxes, student loans, and delinquent child support payments. Or you can file Chapter 13 which is a debt restructuring so that you can pay your debt off.
Filing a Chapter 7 will remain on your credit report for 10 years and Chapter 13 will remain on your credit report for 7 years.
You can hire a lawyer to file for you or you can learn how to do it yourself. If you choose to file either way the process begins with you collecting and organizing all of your past-due debt. There are certain things the court will need from you to move through the process as smoothly as possible.
Start by getting your free copy of your credit report from each of the three credit agencies. You are allowed one per year from each of them. You can order them online from each of the websites of the respective agencies.
Once you have them in hand, list all of your debt on a separate sheet of paper. If you have hired a lawyer they will send you a form to do this with. If not then sit down with a pen and paper and list everything. If you own a house, you will be able to reaffirm the debt you owe on the house and a car as well. List everything including these two things. Include anything that is not on the credit report like recent medical bills, dental bills, utilities owed, and anything else you can think of.
Make copies of your last three years' tax returns, recent check stubs, and bank statements. If you do not have them then you need to spend the time finding out where to get them and ask for copies. This may cost you some extra money to have them make you copies so try to hang on to them when you receive them.
Now you need to list any and all assets you have like real estate, jewelry, stocks, bonds and your vehicle. Like I said they will allow you to reaffirm your debt on your house and vehicle even under the Chapter 7 personal bankruptcy laws. You may have to attend a credit counseling session before you go up in front of the judge before your case will be discharged.