Types

• When filing for bankruptcy, people must choose which type of bankruptcy to file: Chapter 7 or Chapter 13. Chapter 7 bankruptcy wipes away almost all debts except for student loans and child support, according to the website The Bankruptcy Site. Filing Chapter 7, however, requires individuals to give up some of their personal belongings. This suits people with unsecured loans well. Chapter 13 bankruptcy sets up a court-supervised repayment plan that also prevents creditors from calling or harassing the debtors. Home owners earning regular wages often qualify for Chapter 13 bankruptcy.
  
  

Qualifications

• Anyone with secured debts less than $807,750 and unsecured debts less than $269,250 can file for Chapter 13 bankruptcy as of 2010, says the Bankruptcy Site. Chapter 7 bankruptcy has stricter guidelines. It considers a debtor's average income for the six months before filing. A debtor with income less than his state's median income can file Chapter 7. If the debtor has an income higher than his state's median income, he must calculate how much excess money he has per month to pay his debts. Then that number is multiplied by 60 to represent a five-year period consisting of 12 months each. If the excess income over 5 years equals more than $10,000, that individual cannot file Chapter 7 bankruptcy.
  
  

Help

• Nonprofit credit counseling organizations often help individuals seeking bankruptcy advice. However, a bankruptcy attorney makes the most sense. Although no one needs a lawyer to file, a lawyer can help file the appropriate paper work in a timely manner, decide which type of bankruptcy you must file and answer any bankruptcy questions. The best type of lawyer is one who specializes in bankruptcy.
  
  

Credit

• Filing for bankruptcy stays on a credit report for up to 10 years, reports MSN Money. Although sub-prime credit card offers pour in almost immediately after bankruptcy, car and house loans prove much more difficult. Even if a borrower found a lender willing to lend money for a home, the high interest rate would make the payments extremely high.
  
  

Cost

• Based on January, 2010 data, Chapter 7 filing costs $299 while Chapter 13 costs $274. Switching from Chapter 13 to Chapter 7 costs a $25 fee, according to the website Total Bankruptcy. These fees go directly to the court, but do not include the cost of a bankruptcy attorney.