Millions of people struggle to make ends meet each month. If debt is serious – that is, monthly bills are not being paid – filing for personal bankruptcy may be something to consider, albeit a method of last resort.

Bankruptcy is a court proceeding under a federal statue called the "Bankruptcy Code" whereby persons or other entities in financial distress receive relief from some or all of their debt. Bankruptcies are administered through a federal court called the United States Bankruptcy Court.

In 2005, the President signed into law, the Bankruptcy Abuse and Consumer Protection Act, which significantly changes the way in which individuals can declare bankruptcy as well as the steps they must take to eliminate debt. The filing process is more involved for both debtors and their attorneys.

Among the most significant changes:

• A rule now requires consumers to get credit counseling before they file a bankruptcy case.
• After filing, consumers must complete a financial management class to help them identify and correct what led to the bankruptcy.
• Most bankruptcy filers will have to "reorganize" and pay back debt under Chapter 13 rather than use Chapter 7 or "liquidation," where filers are relieved from paying back most debts.
• An individual can file separate for bankruptcy, or a husband and wife can file jointly if they both are liable on the debts involved. Before you make the decision to file, consult with an attorney to help you determine if bankruptcy is the best way for you to eliminate your debt.

Note: This information was prepared as a public service by the Illinois State Bar Association and is a joint project with the Illinois Press Association. Its purpose is to inform citizens of their legal rights and obligations.