Chapter 7 - that's the one where all your debt gets discharged

SO, WHAT DO YOU DO after you take out all these hundreds of thousands (millions, if you are lucky) of dollars in mortgage loans, equity loans and credit card debt? Well, you sure don't need my advice on how to spend all this money. But, now the money is gone and it's time to pay it back. With interest. Otherwise, they'll take your house and take a portion of your salary.

As luck would have it, you have no house, no job, no money and no interest (in repaying your debt). In that case, a Chapter 7 Bankruptcy may be a right option for you. That's when all your debt gets discharged and all your property gets taken away to reimburse your creditors. But, don't worry - a lot of your stuff gets "exempt", meaning that you will be allowed to keep it. Depending on where you live, you might even be able to keep your car, maybe even your house and certainly nobody wants to take away your worthless IKEA couch or your TV. Even if you have a job - you might still be able to declare bankruptcy! But, you should also know that some of your debt might stay with you for the rest of your life - for example, you'll get to keep your student loans even after all your other debt gets discharged.

Generally, you can declare bankruptcy once every ten years or so. That means that your grand ventures should be not be too close together on a time scale. In the next chapter, you can find a couple of ideas that might carry you over the dry years in-between bankruptcy filings.