Loss of Personal Property

• When you file Chapter 7 bankruptcy, you lose all of your nonexempt property. After the court appoints your bankruptcy trustee, he collects your nonexempt funds and liquidates your other nonexempt assets to pay your creditors. If you file Chapter 13 bankruptcy, the trustee won't require you to turn over your nonexempt assets, but he will consider them when he devises your payment plan. If you can't afford your monthly obligation, you may have to sell your property to make up the difference.
  
  

Non-Dischargeable Debt

• If you have certain types of debt, you can't discharge them through bankruptcy. Non-dischargeable debts include delinquent child support or spousal maintenance, fraudulent debts, student loans, DUI judgments and unpaid taxes. Once your bankruptcy is complete, these debts will still appear on your credit report and creditors can continue their attempts to collect.
  
  

Effect on Credit

• During bankruptcy, you can't typically obtain new credit without your trustee's permission. Even if you have her permission, creditors may not approve your application. After the bankruptcy is complete, it will appear on your credit report for up to 10 years. You won't be able to obtain larger loans, such as mortgages, for at least two years. When a lender does offer you a loan, it may carry a high interest rate.
  
  

Other Issues

• When you file bankruptcy, you lose a substantial amount of control over your finances. If you receive a large sum of money during the bankruptcy, such as an inheritance or lottery winnings, your trustee may take it to pay your creditors. Regardless of the type of bankruptcy you file, you will incur a filing fee of at least $150. If you hire a bankruptcy attorney, you will also owe him a fee for his services.