While bankruptcy offers the chance for a financial new beginning, it’s not without its costs. Because declaring bankruptcy has such enormous long-term consequences, it should really only be considered as a last resort and with professional financial advice.

You should consider what financial hardship you’re imposing on others by declaring bankruptcy and what future financial limitations you’re putting on yourself. Before rushing to file for bankruptcy, consider:

• Your nonexempt property such as CDs, stocks & bonds, and valuable collections will be sold
• Under Chapter 7, you still have to pay back your non-dischargeable debts such as child support, alimony, taxes, student loans, FHA mortgage loans, any charges or cash advances taken out immediately before filing for bankruptcy, and fines or charges related to legal judgments
• Under Chapter 13, you will have to be financially self-disciplined to continue paying back your debt according to your repayment schedule

Bankruptcy essentially destroys your credit record in the short and medium term because it remains on your credit report for seven to ten years after you have filed. That means that until you are able to rebuild your credit, you:

• Will have a very difficult time trying to obtain credit
• Will be charged a much higher interest rate if you are able to obtain credit
• Will most likely not be able to purchase a home, rent an apartment, buy a car or finance other large purchases/commitments
• May have difficulty obtaining a job (since employers can request and obtain copies of your credit report and a bankruptcy report can cause some employers to be hesitant about hiring you)