Even if bankruptcy seems to be the only way to get out of debts and have a fresh start, some consequences linked to the bankruptcy process must be taken into account.
So before you file for bankruptcy make sure that the debts you are struggling to repay are not considered non dischargeable because if they are, bankruptcy will not be in your best interest.
If you are thinking of filing for Chapter 13, the value of your property might play a key role. Indeed, even if you are allowed to keep your property, you will have to pay your creditors at least an equal amount to the value of your assets. It means that if you have a significant amount of property, filing for bankruptcy might not be in your best interest.
You might also want to reconsider filing for bankruptcy if you have co-debtors. If you file for Chapter 7, your co-debtors will have to pay any remaining debt you can’t pay. If you file for Chapter 13 though, your co-signers will be protected.
It is also highly recommended to identify the consequences of filing for bankruptcy in your personal life, prior to filing. The bankruptcy process will force you to disclose every last detail of your financial situation to the court, which means that other people might also find out about your bankruptcy.
Filing for bankruptcy will also have a significant impact on your credit scores for many years, which might affect some areas of your personal life. If federal, state and governmental units can’t discriminate you because you filed for bankruptcy, private entities have more liberties and could legally discriminate against you. In fact, some private companies can refuse to hire you or you could be denied rental housing and there will be not much you can do besides trying your best to prove that you are a reliable employee/ tenant and rebuild a solid credit history after bankruptcy.