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Some people think of bankruptcy as an easy way to offload a crushing debt burden, and it’s sometimes the first method they reach for. Well, it may well relieve the burden, but it’s far from easy and should be the very last thing you use to do so.

Understand that filing bankruptcy means you will pay a very small percentage or nothing at all toward the debts you owe. Your creditors clearly do not want that and they do have a say. That means they and the courts will require detailed explanation for why you can not pay and this can get personal. Therefore, while the act of filing for bankruptcy is relatively painless, the entire process is far from that.

If you are awarded bankruptcy, there will be some repercussions that will affect you for years to come, and these should be carefully considered.

You will no longer be eligible for any decent credit. That means that if you are able to receive a significant loan, for instance a home loan, you will be subject to extremely high interest rates which can lead you right back into financial ruin. Any credit cards that you were unable to pay will be lost, and other companies may decide that you are no longer a good risk and terminate your credit with them.

Bankruptcy does not always mean debt free. Some debts are exempt, such as back taxes within three years and student loans.

A bankruptcy stays on your credit for ten years, and it is very difficult to rebuild good credit afterward. Though your FICO scores are very important, nothing is looked upon more seriously and has a more negative effect on your credit than bankruptcy.

In addition to sacrificing any chance of good credit for years to come, you may also be required to sacrifice some of your belongings. Though the courts usually allow you to maintain possession of your primary residence and your car, any other real estate or personal property of great value may be confiscated.

As with any legal proceedings, bankruptcy costs money. You will be required to pay a lawyer and any court costs incurred. When you are already in financial trouble, this can be a very unwelcome expense.

There are some positives to bankruptcy as well. The debt collectors will stop calling once they receive word that you have filed bankruptcy. Also, you are protected from wage garnishment and from loosing your primary residence in foreclosure. If these things are eminent and you have run out of options, bankruptcy may give you a fresh start so that you can begin to rebuild your credit.