Have you suffered a heavy financial loss? Your friend suggested that you file for bankruptcy and you know nothing about it. Here is what you need to know. You can file for bankruptcy, a process through which you can get away with all your debts. It is a narrow escape from your creditors and a big relief to make a fresh beginning. Filing for bankruptcy is a legal process and every step that you take should be correct and things should be in place.

Firstly, get in touch with a lawyer who specializes in bankruptcy. You would ideally like to work with some one who knows the steps and the process of bankruptcy. When you meet your lawyer for the first time to discuss the process make sure that you carry along all your papers such as bills that you owe, verification of your monthly income and statements from your bank

Be very clear and forthright in calculating your entire debts, minor ones included. Dont be apprehensive, if the amount you figured as a debt is too high. Both, your lawyer and you need not be skeptical about the declaration. After all you are on the threshold of making a new beginning in your life.

The lawyer might brief you about the secured debt and unsecured debt. In secured debt, the creditor always keeps a back up for the money you owe him. For example he might attach your property or any asset of yours, for the money you owe him. And you might have to part with your belongings, if you are not in the position to repay your loans. However, such criterion is not present in an unsecured debt.

Mind you, not all the debt of yours can be cleared by filing for bankruptcy. Some of them are students loan, child support and any unpaid back taxes. These remain outstanding in your bills that you owe. Lawyer needs to be well informed in order to draft a proper application for bankruptcy.

Once youve determined all your debt youll be filing a bankruptcy petition with the local courts in your area. Your creditors will need to be contacted and notified that youve filed for bankruptcy. Once youve filed for bankruptcy your creditors will be unable to contact you and wont be able to collect any of the money that you owe them.

Then a trustee who is assigned to your bankruptcy case will settle your debt. The trustee will then be responsible for paying your debts and staying in touch with your creditors. Incase you have a property or some other assets it would be sold off to pay off the debts. At certain places you are entitled to get some profit on the sale of your property. There are also cases where you can be given an allowance to live off for a certain period of time.

Bankruptcy is a long and a tedious process. It may affect your financial outlook for years to come. So make sure that all the papers are intact with you for the bankruptcy process.