Prior to 2005 filing bankruptcy was considered an easy thing to do. If you got into trouble financially, the myth was to go file Chapter 7 bankruptcy and wipe it all away (with a chapter 13 bankruptcy you are put on a payment plan to pay back your creditors over time but the debts still remain).
However, this could prove to be the farthest thing from the truth. Yes it was easy to file and in 3 months you received a paper in the mail telling you your debts had been discharged. Then you began to receive a slew of letters in the mail for new credit cards and other credit items that would help you "Reestablish your credit". The problem with that is now you are free and clear from old debt and take on new debt at a much higher interest rate in most cases. Ultimately this would put you right back where you started with mounds of debt. Not to mention the lingering 10 year blemish on your credit reports.
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With the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 it changed the face of bankruptcy. No longer can you just walk into a courthouse and file your paperwork. Currently you have to go to a credit counselor, receive a certificate for verification that you are seeing one, and make payment arrangements with your creditors for 180 days prior to filing Bankruptcy. You basically have to do your due diligence to get your finances in order and only use filing as a last resort.
A chapter 7 filing is also harder to get approved by the courts. There are certain income thresholds that you will have to fall under. Your tax returns, pay stubs, and any other financials will be brought into court and a judge will determine if you will be able to repay your debt within the next five years. If it is determined that you can repay your debt you will be put on a payment plan and will have transitioned into a Chapter 13 bankruptcy. This makes it harder for individuals who want to rack up debt and then not pay just because. The law has been structured for those who really need it and for protection of you and creditors.
If you are thinking of filing for bankruptcy you should first gather all your financial information and try contacting a local consumer credit agency and getting a free (in most cases) consultation. They can let you know what your best options are. With people losing their jobs daily and wiping out any and all savings it is understandable that paying a creditor may take a backseat to putting food on the table. You should always try and speak with your creditors. Don't avoid phone calls or leave unread mail lying around the house. A creditor might be willing to work out the simplest payment plan with you if you just communicate. They don't win either by you not paying so they will want to help.
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