If you have unmanageable debt the first thing you should do is contact a Licensed Insolvency Trustee (LIT). They often provide a free initial consult. They will evaluate your situation and help you consider your options. Bankruptcy is one of several options. Credit counsellors are also a good first step – as you may be able to find a non-profit that will not charge for their services. Credit counsellors however can not actually complete the bankruptcy process and will likely refer you to a LIT.
If you chose bankruptcy you will work with an LIT to file forms to officially declare bankruptcy. Once you file for bankruptcy your LIT will deal directly with your creditors on your behalf. Your assets will be sold, and the proceeds will go to paying off your creditors. Your creditors will be notified, you will stop making direct payments to unsecured creditors, any wage garnishments will stop, and any lawsuits by your creditors against you will stop as well. You will have to attend financial counselling sessions. If you make over a certain amount of money each month you may also have to make surplus payments.
Eventually you will be discharged from bankruptcy. A discharge releases you from the legal obligation to repay the debts you had the day you filed for bankruptcy. The timing of your discharge will depend on several factors including your income and the number of bankruptcies you have declared. Debts relating to spousal support and child support will not be discharged. You still must pay those debts. Student loans will be discharged as long as you declared bankruptcy 7 years after you graduated.