1. To effect a quick, equitable distribution of the debtors property among his or her creditors
2. To discharge the debtor for their debts, enabling them to rehabilitate themselves and start afresh.

• Bankruptcy stays on your credit report for up to ten years.
• You will have difficulty getting future credit such as mortgage loans.
• Any credit you get will probably cost you more in terms of interest rates and fees charged.
• Alimony, child support, and most taxes survive bankruptcy and will still be owed

Bankruptcy does not wipe your credit slate clean and give you a fresh start. Bankruptcy should be a last resort to solving financial problems used only when the amount of debt is so great and the creditors so unrelenting that no other way out. There are two types of bankruptcy available to most people, Chapter 7 and Chapter 13.

Chapter 7 bankruptcy is referred to as "straight bankruptcy" or "liquidation," because the debtor's unprotected assets are converted to cash and disbursed to the debtor's creditors to repay part of the debt owed.

Any person, partnership and most corporations can file Chapter 7.

Chapter 13 bankruptcy affords the debtor the opportunity to repay all or part of his debts over an extended time period. This plan requires that the debtor have a consistent income to make future payments for the duration of the plan.

Chapter 13 is designed for consumers who need relief from their creditors and collection activity to reorganize their debts and devise a plan to repay them.

The debtor is allowed to keep all of his assets, including those not exempt and not mortgaged. Both types of bankruptcy may get rid of debts where creditors have no specific rights to property, and may stop foreclosures, repossessions, garnishments, utility shut-offs and debt collection activities

• Rather than trying to avoid your creditors, talk to them.
• Let your creditors know that you would like to work out a plan to begin paying off your debt.