Might I just point out one little point that appears to have been missed in the many interesting views posted...
It's been briefly mentioned about assests.... i.e. for most folks their home.
That can be a very critical point.... don't ignore it.
The bankruptcy route really does only work if you have no home, in particular.
Those lenders who have issued unsecured loans (credit cards/personal loans etc) usually charge a level of interest above that of a secured loan on the basis that they are exposed to greater risk.
However, if you actually have any assets (such a home, mortgaged or not) they will move very, very, very quickly to get to court the moment they detect any risk in you not repaying.
The sequence they use is to firstly get a court order for the debt, which will be automatic as you do owe them the money.
Courts being mostly reasonable places will not allow them to harass you for something you cannot pay so the court will look at your finances and make an order for you to pay only what you reasonably afford ... and you get to keep your assets.
The sting is in the next stage.....
Your creditor will then happily take this £1.00 per month (or whateveer the court decide) but trot back quickly to the court and as a matter of course obtain a charging order.
They will now have a charge over your home until the debt is repaid.
Joint ownership etc doesn't matter, nor does the current equity available.
They have now secured the loan and will happily sit back for many, many years knowing that eventually they will get their money back.
Actually, not quite accurate. What they will do is sell your debt on as they have now turned your unsecure debt into something of value - a secured debt.
Apparently there is an absolute boom industry in financial circles at the moment in just this sort of enterprise.
So for anyone thinking of bankruptcy it is of course crucial you have no assets.
For anyone who does have a home and thinks their unsecured loans are just that .. think again .. while you have a home any loan is easily secured.
Does rather make those high credit card interest rates even more of a "poor value" financial tool ...... for the borrower of course .. not the bank.