Poor Credit

• Once you reach the point where you need to file for bankruptcy, your credit score will likely already be close to its lowest point. That's not to say that the filing won't drop your scores further, but at that point, your score is probably already too low to obtain any new credit. However, the bankruptcy will stay on your credit report for up to 10 years after being discharged and may lead to denials and higher interest rates when you do apply for credit.
  
  

Loss of Assets

• In Chapter 7 bankruptcy, your assets are transferred to a trustee who facilitates their sale to pay your creditors. Depending on the property exemptions of your state, you may lose your house, your car and other assets. Chapter 13 involves setting up a repayment plan over a period of three to five years, which will allow you to keep your assets. If you do not abide by the terms of your repayment agreement, however, a creditor can appeal to the court to convert your case to a Chapter 7 filing.
  
  

Forced Budgeting

• To file for Chapter 13, you must have less than $100,000 in unsecured (e.g. credit card) debt and less than $350,000 in secured (e.g.. mortgage, car loan) debt. You will work out a payment plan with the trustee that will satisfy your debts in at least the amount you would pay through Chapter 7. If you cannot pay this amount through future income, you will need to live on a strict budget for the duration, and any extra income you receive will likely have to go toward the eventual discharge of the bankruptcy.
  
  

Lingering Debts

• Bankruptcy will eliminate most secured and unsecured debts, but certain debts cannot be discharged, including student loans, alimony, child support, tax liens and debts incurred as a result of theft or fraud on the part of the filer. If most of your debt is in one of these forms, bankruptcy will not help you.