When your debts substantially exceed your assets, you may be a candidate for bankruptcy.  In consumer bankruptcy, there are typically two ways to go: chapter 7 (liquidation) and chapter 13 (reorganization).  In chapter 7, a petition is filed with the United States Bankruptcy Court, listing your financial information, including assets and liabilities (creditors).  Typically, at the end of a chapter 7 case, you are allowed to keep property that is exempt, and any other non-exempt property will go to pay your creditors in order of their priority.  You may not qualify for a chapter 7 bankruptcy based on your income and a "means test."  In that event, you are only elegible for Chapter 13 bankruptcy. 

Chapter 13 bankruptcy is primarily for a wage-earner, or someone with a source of regular income.  Non-exempt income and assets must go to pay your creditors according to a "reorganization plan."  The reorganization plan is a function of your regular income.  You will typically be able to pay off your unsecured creditors over a period of three or five years, based on certain factors.  You also have certain rights to modify or reduce secured creditors, such as a lien against your automobile, or a trust deed against your home. 

In a typical bankruptcy case, there is a filing fee to be paid to the court, and attorney’s fees are paid in a lump sum at the beginning of the case.