Actually, bankruptcy allows you to make a fresh start. Generally, it takes only a small amount of money, a careful evaluation of your assets and your liabilities. In many cases, a lawyer is not necessary.

If you have very few assets, mountains of debt, and not enough income to meet your obligations, then your best bet is almost always filing of straight bankruptcy. What you'll need is proper forms "S3010 Bankruptcy forms, for an Individual Not Engaged In Business." These can be purchased from any full-line office supply store, especially in an area serving attorneys' offices.

You'll need to know which district you live in for Federal Court purposes - so look in white pages of your telephone book under U.S. Government - Courts - and take down address of nearest U.S. District Court. Check it out to be sure that your residence is in this court's jurisdiction.

You then fill out forms you purchased, listing all of your creditors - those with priority being listed first - meaning those who have extended credit to you against some sort of security or collateral, followed by those who have extended credit to you on just your signature or reputation. You must be sure to list all of your creditors because any that you fail to list, will be able to sue you and collect even after bankruptcy has been adjudicated. At same time, be sure to include names of anyone and everyone you may have co-signed a note or a loan for, as well as anyone who may have co-signed for you.

The laws governing personal bankruptcy vary in all states, but generally, a bankruptcy judgement will not take away house you live in, basic home furnishings, a car that's necessary towards your gainful employment, nor tools of your trade. Check these things out to be sure against list of items regarded as necessities of life by your state.

When you've got all forms filled out, and notarized, you take them to Clerk of U.S. District Court in your jurisdiction. You pay clerk $50, and from there, you're home free. The clerk notifies your creditors, and reminds them that being as you've filed bankruptcy papers, they cannot bother you about your debts anymore.

However, they are invited to your hearing. Usually they don't show up, because by that time, you have very few, if any, nonexempt assets left that they are really interested in.

But, whatever assets you do have that are nonexempt, will be sold by Court to appease your creditors. Any money realized from these sales is then added to total amount of money you may have turned over to court at time of your filing, and divided equally amongst your creditors according to priorities.

After all of this has taken place, and usually about 3 months after you've been adjudged bankrupt, you can start all over again to incur debt, pay bills and establish a new credit rating. However , you should be especially careful about talking with your old creditors because they may attempt to maneuver you into signing a "reaffirmation" of your old debt. The thing to do is to be sure that you carefully read anything you affix your signature to, and don't agree to pay on any debt that has already been discharged through your bankruptcy!

Creditors approve credit to those people who most closely match right profile. They arrive at those conclusions by assigning point values to various items of information that are included either on your credit application or in a credit report.

Credit card companies like credit scoring systems because as a large volume creditor, they can replace trained credit personnel with a relatively few employees who can quickly total number columns and determine is an applicant's point values add up to right score.

Scoring, of course, is done for one reason. A creditor just wants to know that odds are high he will get his money back. Scoring systems are fine for those people who fit right into right profile, but what about those who don't but could pay off their monthly obligations just as easily and reliably as next person? If you are one of those people who just doesn't "fit mold," you'll simply have to make a few adjustments in your application so that you fit scoring profile of what a creditor is looking for in a final total.

HOW CREDITORS RATE AN APPLICATION

The first thing you should know is that every system is different. That in itself can work to your advantage. You could be rejected by one company's scoring system and approved by another. One creditor's system will give you many points for a good answer, and totally ignore a question that gives a negative answer. Another creditor can simply reverse process.

Keeping in mind that creditors use different scoring systems, we will list only most important questions and briefly review how a response can affect your total score. The following categories are listed from highest to lowest awarded each response.

RESIDENCE- The longer you have lived in one place better. Stability is given high points.

HOME OWNERSHIP- The best possible housing situation is to own your own house, even if it is mortgaged. The worst is: renting an unfurnished apartment, living with your parents, living in a trailer or motel.

GEOGRAPHIC LOCATION- Scoring systems are adjusted for differences in geographic locations. For examples, home ownership may not score high in an area where there is a high incidence of credit problems, reoccurring employee/employer differences, low income, etc.

EMPLOYMENT-The longer you have been on job better.

OCCUPATION-Occupations can be divided into many categories with a high to low score within each category for different occupations. Sometimes an employer is scored, instead of occupation of applicant.

AGE-Older is not considered better until you pass age 40. Under 25 to end of 30's receive lowest scores. The rational is that people under 25 haven't proven they are a good credit risk. People in their 30's are still raising a family, buying a home, and tied down with enormous expenses. This is also time most people declare bankruptcy.

INCOME- The higher your income more points you will receive.

TELEPHONE-Having a telephone is an indication of stability. Give yourself more points.

AGE OF AUTOMOBILE- No auto is a low score, but newer vehicle higher score.

DEPENDENTS- One to three indicates responsibility and stability. After three, points drop rapidly.

CITIZENSHIP STATUS- Non-citizens receive negative points.

BANK ACCOUNTS- You receive high points if you have a checking and savings account.

CREDIT REFERENCES

IN-HOUSE RECORDS- A good payment record will earn you more points.

CREDIT CARDS- The more major credit cards you have better.

BANK LOAN- A current bank loan will increase your score.

FINANCE COMPANY LOANS- You will receive negative points for each finance company loan.

TWO POWERFUL STRATEGIES THAT CAN GET YOUR APPLICATION APPROVED

Credit checks are requested by banks, lenders, and other creditors to see if there are negative items in your file. The more negative items you have, less your chances of credit will be. As we have seen, creditors look for stability and reliability in an applicant. A steady source of income will receive a high score, but even more important than an income amount is a creditors belief and perception that you are both willing and able to pay back a debt.

In other words, even if you fail to pass certain criteria or formulas, your application can still be approved on another level that will get you credit you want no matter what a scoring system profile says.

Extending credit to customers is way creditors make money. If you convince them you are a good risk they will give you what you want. Basically, there are two ways you can achieve that goal.

1) You can bypass normal scoring methods that are used by impressing person your application that you are sincere, reliable, stable, and have ability to make monthly payments on a loan or credit card account.

2) You can tailor your answers to applications questions and in that manner fir into right scoring mold of what a good credit risk is, according to formula they are using.

That doesn't mean you should lie on your application. It simply means you should be aware that being compatible with certain stereotypes will work in your favor. remember, a creditor can still verify information you list in an application. Still, many people truth to put themselves in a favorable position. For example:

1) Some applicants will list their parent's, a friend's or a relative's address as their own residence and indicate they have lived there for years, knowing it probably won't be checked.

2) Provided an applicant has a friend or employer who will go along with the, he can list a position and salary they don't really receive. Then when creditor calls to verify employment friend will support what application has claimed to be true.