Loss of Assets

• When a person declares Chapter 7 bankruptcy, he may be forced to give up a number of personal assets to pay back his creditors. The exact assets that he will have to give up will vary depending both upon the circumstances of his bankruptcy and the laws of the state in which he is filing. However, in some cases, the person may be forced to give up his house, his car and his savings.
  
  

Credit Rating

• Perhaps the most negative effect of bankruptcy is the damage that is does to a person's credit rating. While the exact damage will vary depending on the person's previous credit history, all bankruptcy filers can expect to take a hard hit to their rating. In addition, the listing of a bankruptcy will remain on their credit report up to 10 years. However, the debtor can begin to rebuild her history and up her score shortly after filing.
  
  

Difficulty Receiving Loans

• Although a person may be able to begin to raise his score by taking out new credit shortly after filing, lenders will be able to see that the person filed for bankruptcy for years after the filing. Even if the person has been able to raise his score, the presence of a bankruptcy on a person's credit report may make it more difficult for him to receive loans and other forms of credit, as lenders believe him likely to default.
  
  

Considerations

• In some cases, bankruptcy may in fact be advantageous to the debtor. For example, if he has a sufficient number of debts that continue to grow in size due to the assessment of fees and interest payments, bankruptcy may provide her some protection from creditors. However, before initiating a bankruptcy filing, all debtors should carefully investigate all options relating the management of their debt. If possible, they should consult an attorney or a financial planner.