Before you consider filing for bankruptcy, it is important you understand the difference between different types of bankruptcy and your reasons for filing.  Credit rating is affected and much legality is involved.

Full freedom from the debt is not easy nowadays as the changing laws are getting tougher. Federal laws are supplemented by additional laws in many states.

If you are filing for bankruptcy, you can be affected by two main chapters of bankruptcy, Chapter 7 and 13.  Both of these chapters of bankruptcy are common and take into account individual debtors and small filers.

Chapter 7 also known as liquidation frees the debtor from all requirements to repay debt and may result in liquidation of assets.  More commonly, the debtors assets are exempt from the process of liquidation.  Fraud-related loans, student loans debt, State and federal debts may not be discharged through this process.

Chapter 13 is for the restructuring of debt and is commonly known as Reorganization. A repayment plan can be worked out by the debtor and creditor on the basis of approval from the court regarding the payment of the debt.

On the other hand, Chapter 13 an attempt to liquidate assets for the payment of complete debt amount. In order to make part payment of the main debt, re-structuring of payment plans is done more often. You can clear all your debts in less than five years.

Legal and Filing fees: Fees is approximately $800 or may be higher for a single person. Couple fees and business owner fees is $1,000 or more. You have to keep all the paperwork up to date to help your attorney in filing your documents. You will also have to spend time reviewing bills and answering questions to your attorney.