- Corporations who are ready to cease business operations and eliminate all corporate debts can file for Chapter 7 bankruptcy, according to the U.S. Securities and Exchange Commission. Bankruptcy court trustees sell all business assets and try to partially repay creditors with the proceeds. Companies who wish to stay in business but keep assets and partially repay debts can file for Chapter 11 reorganization. Self-employed people can also take advantage of Chapter 11 and include personal debts in their partial repayment plans.
- You must get credit counseling before filing personal bankruptcy, warns the book "How to File for Chapter 7 Bankruptcy." Most Americans choosing personal bankruptcy select a debt liquidation plan under Chapter 7 or partial debt repayment under Chapter 13. Some debts are ineligible for bankruptcy relief, including most federal student loans, recent tax bills, child support, alimony, court fines and any bills related to criminal activities.
- You must economically qualify to declare Chapter 7 and risk losing many of your assets. Generally, you must earn no more than your state's annual median income level. If you earn more money, you can only file Chapter 7 with special permission. As of 2011, the annual median income figure for a single person in Puerto Rico was $21,273, while a family of four living in Maryland could bring in up to $103,361 per year, according to the U.S. Trustee Program. The fact that you filed Chapter 7 bankruptcy will harm your credit score for 10 years from the date of case filing.
- If you have steady income and your unsecured debts, like credit card bills, do not exceed $360,475, you can file Chapter 13 with your nearest division of the United States Bankruptcy Court. It takes three to five years to partially repay debts in Chapter 13. During this time frame, you cannot get new credit accounts without a bankruptcy trustee's consent. Your credit rating will only be damaged for seven years from the date you originally filed your Chapter 13 request.