In the last column, I promised a general overview of a consumer bankruptcy because, even though filings have generally been decreasing nationwide in many areas since 2005, it seems that we all know someone who is talking about filing for themselves or someone that they know.

As we have discussed, filing a consumer bankruptcy case is not cheap, and, unless you pay off all of your debts in full in a Chapter 13 “wage earner plan” proceeding, it will likely negatively impact your access to new credit for seven to 10 years.

Here are some practical reasons that I have often heard for considering bankruptcy: Your debts are more than one-half of your annual income; it would take more than five years to pay off your debts, even with a bare bones budget and a lot of sacrifices; and/or your debts are affecting your health, work or important personal relationships.

Bankruptcy proceedings are complex, which is why you will need a competent bankruptcy attorney if you are going to file one. They will carefully review your individual circumstances, financial and otherwise, in order to ensure that you receive the best possible “fresh start.” Therefore, this general overview is just that, a general overview of the questions that seem to come up the most, and it is not intended as advice, except to this extent. If anyone feels that they need bankruptcy relief, I believe that they should first go to a credit counselor, approved by your local bankruptcy court (you will need to have this counseling within 180 days anyway if you do file), in order to determine if bankruptcy can realistically be avoided, and if not, to look at some lessons, tactics and techniques for life after bankruptcy.

If a bankruptcy proceeding is advisable, visit a few sites online like uscourts.gov and nerdwallet.com, to learn much more about a consumer bankruptcy before you meet with a bankruptcy attorney, so that your meeting will be more productive.

Basically, there are two kinds of consumer bankruptcies. First, and the most common, is a Chapter7 “liquidation” proceeding. In a Chapter 7, conceptually, debtors surrender all of their non-exempt assets for liquidation and distribution to their creditors, in exchange for a discharge, or forgiveness, of all of their dischargeable debts. That is correct, not all debts are dischargeable or forgiven in bankruptcy case. That may sound a little scary and a lot confusing, so let’s look generally at what assets are exempt, and do not have to be surrendered and liquidated, and what debts are generally non-dischargeable.

Bankruptcy is a proceeding in federal court under federal law, but there are both federal and state exemptions that can be taken advantage of in New York. Which exemptions, or what combinations, to claim, given your financial facts and circumstances, will require advice from your attorney. The most important ones include, in Upstate New York, $75,000 of equity in your home (equity is value over and above any liens, like a mortgage). This homestead exemption can be doubled in the case of spouses filing jointly, if they own the residence jointly. In addition, $4,000 of equity in a vehicle is exempt, $10,000 for a disabled debtor. Also, government benefits, like Social Security, and qualified retirement plans. Last, a cash exemption of $5,000, if no homestead exemption is claimed. There are other exemptions, like interests in a personal injury claim, and there can be combinations claimed in joint cases and otherwise. That being said, again, you will need the advice of your attorney to claim the best exemptions for you, including whether to elect the state or alternative federal exemptions that are also available. The bottom line is that you will not “lose everything.”

Then there are those non-dischargeable debts that you may have heard about. Again, this is a complicated area, and there is a broader discharge available in a Chapter 13, the second consumer proceeding available, where eligible debtors pay some or all of their debts over three to five years under a court-approved “wage earner plan.” Once again, with some exceptions, non-dischargeable debts include student loan debt, certain taxes, spousal or child support or alimony, debts for personal injuries from the operation of a motor vehicle while intoxicated, governmental fines and penalties, and attorney’s fees in child support and custody cases. There are others, as well as certain debts which require creditors to make a successful challenge to the discharge of their debts, such as debts obtained by fraud or false pretenses, debts as a result of willful and malicious injury, and some credit purchases for luxury goods or cash advances, both within a certain short time before filing. When it comes to non-dischargeable debts, the advice of an attorney, again, is critical. It can even determine whether or when you will file, and under what chapter.

Lastly, filing bankruptcy can be expensive. Filing fees are over $300, unless waived because of a poverty exception, but they can often be paid in installments; then there are fees for credit counseling and attorney’s fees. They can all add up. Attorney’s fees can seem very expensive, especially when debtors, by definition, are financially hurting, but you need a competent one, and fees may depend on how complicated your case is likely to be. Also, legal aid may be available to you. In the end, it may be a good investment if you obtain that “fresh start.”

As I have said, this is a very brief and general overview of some often asked questions. Visit the above and other websites to learn much more about the documents you will need to gather, the schedules you will need to fill out and file, and the court and related proceedings required.

Next time – back to school for college students.

John Ninfo is a retired bankruptcy judge and the founder of the National CARE Financial Literacy Program. Find his previous weekly columns at http://www.mpnnow.com/search?text=Ninfo or at http://www.monroecopost.com/search?text=Ninfo