Before you settle on the idea to file for bankruptcy, there are things you have to consider. There are several alternatives to bankruptcy, and if your situation is not a closed case, you could find a way to pay back your creditors.

However, for some people, bankruptcy is the ideal solution. In some cases, bankruptcy is the only way out and could give you better options. If bankruptcy is for you, then the key to a successful file is to consult with a qualified attorney who will help you through the process. Moreover, you need to understand the types of bankruptcies available to you.

Before you decide to file for bankruptcy, you must understand some of the consequences you will face once you file for bankruptcy. These consequences will help you make your decision and prepare you for what you will be up against. 


It is one of the positive effects of declaring bankruptcy. Personal discharge is when a bankruptcy court passes a permanent order that forever prevents creditors from collecting on your existing debts.

Bankruptcy courts discharge credit card debt as they have determined that credit card companies can afford to take the hit. They cannot go out of business over one person’s debt. Courts determine that the person will be much more productive if they are free from debt.

Personal discharge has its limitations on what debt is forgiven. For example, alimony, student loans, and child support obligations will remain as they are considered too important to be wiped clean. 

Automatic Stay

Another positive aspect of filing for bankruptcy is the automatic stay feature. It is a preliminary court decree that protects you as the filer from creditors who want to collect a debt. Once your case enters the court, creditors have to back off and stop sending you emails or call you to get to pay back the debt. The automatic stay remains active until a judgment is passed on your case. 

Credit Score

A negative effect of filing for bankruptcy is that s depresses your credit score. Bankruptcy will negatively reflect on your credit score for seven to ten years. Moreover, the history of past debts will remain even if the debt is discharged. 

When you decide to borrow again, your history will pop up and give lenders the idea that you are a risky borrower. This will hinder the process and make it hard ever to get a loan again. Even if you qualify for the loans, you could end up with a higher interest than everyone else. Eventually, you can slowly build up your credit after you have filed for bankruptcy.

Loss of Property

If you file for bankruptcy, you may lose your property to the bankruptcy trustee. When you register for bankruptcy, the court steps in to determine how much debt you can afford to pay if you have a property with a significant value you will be forced to sell them to pay off debt. Items that hold no advantage when sold will instead remain in the trustee’s possession. 


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