Because of your inability to pay your debts, you assign all of your assets, except those exempt by law, to a licensed trustee in bankruptcy. This process relieves you of most debts, and legal proceedings against you by creditors should stop.

A decision to file for bankruptcy is a serious step, and in many cases, it doesn't wipe your credit slate clean or give you a fresh start. It also stays on your credit report for six years from the date of discharge. Its presence there could affect your ability to buy or rent a home, or even to obtain car insurance.

Anyone who cannot meet his financial obligations or is an insolvent debtor qualifies to file for bankruptcy.