Is declaring personal bankruptcy the right way for you to go? Avoid it if possible is the correct answer, as it always has been. Chapter 7 bankruptcy will "wipe your slate clean", but the barriers to filing for Chapter 7 are much higher than they were a few years ago. It all starts with credit counseling, a "full employment act" of sorts for credit counseling agencies.

After counseling, you are ready to file. But you are no longer able to choose whether to file for Chapter 7 or Chapter 13, a court will decide whether or not you qualify for the "fresh start" of Chapter 7. The basic considerations begin with your income level versus the median income for the state in which you live. As long as your income is lower than, or equal to the median income of your home state, you should be allowed to file Chapter 7. Otherwise, barring some mitigating circumstances, which you will need to demonstrate to the court, you will be made to file for Chapter 13. This will mean you repaying a substantial amount of your debt, and retaining the credit problems on your credit history. Finally, you will be required to undergo credit counseling in either case - go figure!

So if you just don't have sufficient income to allow you other options, you may need to deal with the bankruptcy regulations. Your attorney now needs to certify that the filing is accurate, another cost borne by the debtor. In short, this has become a most difficult and costly process for those in deep financial trouble. People in financial trouble should always consider the full range of options and consult an expert before taking action.