The First Steps
Before we look at how to file for bankruptcy, let's first determine if you are actually bankrupt. Using the guideline of the Chapter 7 bankruptcy laws, you would be considered bankrupt if your liabilities exceed your assets. In simple terms, this means that if you were to sell everything you own, down to the last shirt, and used that cash to pay your bills, and it was not enough to pay off all your debts, then you would be considered bankrupt and a potential candidate for filing for bankruptcy.
For example, say that you have a house, household furniture, a car and a savings account, and these could all be sold for $150,000.00. This amount would be the value of your total assets. Next we would add up your debts. In this example, you have credit card debts, a mortgage, a car loan, and several large unpaid medical bills, and all these total $175,000. Since $175,000 (the amount of your liabilities) is larger than your assets ($150,000), then you could be considered bankrupt.