You can file one of two forms of personal bankruptcy, Chapter 7 or Chapter 13.Chapter 7 allows you to discharge or cancel certain debts. This form of bankruptcy makes the most sense when you have significant debts that you're legally allowed to cancel.

Chapter 13 comes up with a repayment schedule that requires you to pay your debts over several years. Chapter 13 stays on your credit record (just like Chapter 7), but it doesn't eliminate debt, so its value is limited -- usually to dealing with debts like taxes that can't be discharged through bankruptcy. Chapter 13 can keep creditors at bay until a repayment schedule is worked out in the courts.