1. Bankruptcy doesn’t erase all debts

Debts such as back taxes less than three years old, student loans, alimony, child support and debts acquired through fraud are usually not dischargeable. Even though you declare bankruptcy, don’t assume you’ll suddenly find yourself debt free.

2. Bankruptcy might not be cheap

First, there are the obvious expenses of filing costs and attorney fees. Also, a record of your bankruptcy will remain on your credit report for seven to ten years. This could make it hard to attain any new loans and, if you are able to get new credit, the interest rates and repayment terms will probably not be favorable for you.

3. Bankruptcy influences more than your credit

* Emotional stress
* Less ability to rent an apartment or qualify for affordable insurance
* Possibly influence your ability to get a job or promotions

4. Bankruptcy doesn’t change your suboptimal financial habits

Bankruptcy may not solve your long-term financial problems. Most likely, your financial problems came about in part because of the way you handled your money. This is often due to embedded|ingrained habits that have been a part of your psychology for years. Without a change in lifestyle and spending habits, you may very well find yourself right back where you started.