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You can use exemptions to protect your property. If you ?exempt? an asset, it will be protected from being sold to repay creditors. Protecting assets in bankruptcy usually depends on the exemptions available to you in the state where you live. Exemptions vary from state to state.

If your total monthly income over the course of the next 60 months is less than $7,475 then you pass the means test and you may file a Chapter 7 bankruptcy. If it is over $12,475 then you fail the means test and don't have the option of filing Chapter 7.

Some debts cannot be wiped out in bankruptcy Other debt that cannot be erased include child support and spousal support (alimony). And, certain other debt owed as part of a court order during divorce may also be off-limits: support to the ex-spouse in the form of, say, continuing to cover a car lease payment.

The solution may be Chapter 7, which discharges debts but also liquidates assets though not all of a person's assets. Chapter 13 bankruptcy allows a person to keep their assets, but puts them on a strict repayment plan. No matter which type you file for, the court puts an ?automatic stay? on any foreclosure action.

As bad as bankruptcy is, it doesn't leave a lifelong black mark on your finances, but restoring your financial good name takes effort as well as time. Bankruptcy is a tradeoff. It wipes away or reduces debt that you can't afford to pay, but it tells the world that you're a credit risk.

Types of debt that cannot be discharged in bankruptcy include alimony, child support, and certain unpaid taxes. Other types of debt that cannot be alleviated in bankruptcy include debts for willful and malicious injury to another person or property.