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Its not a great moral sin to go into bankruptcy. Just look at the seminal American department store chain Kmart. They went bankrupt in 2002 and rebounded just 15 months later. When you (or Kmart) declare bankruptcy, you are given an opportunity to try to get your life back on track without the people that you owe money breathing down your neck.
In the old days, if you couldnt pay your bills, you were thrown into debtors prison. Believe it or not, going through bankruptcy Proof of Claim court is better than going to prison.
Only As A Last Resort
Declaring bankruptcy will stay on your credit record for ten years, so be sure you have no last resort. Bankruptcy Proof of Claim courts rules and regulations differ from state to state. The only state you need to worry about is the state you live in (or state of your primary residence.) You can do this all on your own or hire a lawyer. If you are not familiar with bankruptcy Proof of Claim court, then it will cheaper in the long run to hire a lawyer. You and the lawyer need to decide between a Chapter 7 bankruptcy (liquidation of everything you own) or a Chapter 13 (a repayment plan).
Filing a Proof of Claim
A Proof of Claim needs to be filed within 90 days of your meetings with your main creditors (banks or credit card companies, for example). You are called the debtor. Whoever you owe money to is called a creditor. They have to give you about 100 days before they have a meeting with you (called a 341 meeting) where you officially declare bankruptcy. As a debtor, you are not responsible for filing the Proof of Claim forms. Instead, it is the creditors' responsibility to file the claim in court. If they dont do this on time, they will lose any right to the financial that you owe.
Other Tips
When you declare bankruptcy do not use any credit cards. This will look bad to any states bankruptcy Proof of Claim court. Also, you should not be worried about your employer or landlord being notified of your bankruptcy. Federal law requires that your employer and landlord need not be informed of your bankruptcy. Although, bankruptcy claims are considered public records, it would be up to your employer or landlord to check the records out. In reality, only a small percentage of employers and landlords research your bankruptcy history to this degree.
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