If you are planning to file for Chapter 7, first consider the pros and cons of retaining a bankruptcy attorney and going through with it. Take a look at this list of the pros and cons of bankruptcy and decide what is the right move for you in your current financial situation.

The Pros of Bankruptcy:

Hiring a bankruptcy attorney can be a debt management tool to help solve your financial problems.

1. Fresh Financial Start – The biggest advantage of having a bankruptcy attorney file your claim is obviously the hope of obtaining a fresh financial start once your debts have been discharged.
2. Automatic Stay on Debts – Creditors must stop their collections efforts when you file for bankruptcy. All collection actions from creditors will be stopped including: foreclosures, repossessions, and garnishments. If they haven’t, contact your bankruptcy attorney immediately to bring the matter in front of a judge.
3. Protection of Essential Property­– In most states, your home, car and other essentials are exempt so your bankruptcy attorney will ensure you do not wind up homeless or unable to get around.

The Cons of Bankruptcy:

It is important to note that filing for bankruptcy is a last resort option and is not something that should be entered into lightly.  Any bankruptcy attorney you hire should make the following list of some important ramifications very explicit to you:

1. Credit Score – Filing for bankruptcy will severely damage on your credit score for up to ten years. This will make it difficult to acquire credit in the future, buy a home, car or obtain life insurance.
2. 2. Inability to Obtain a Mortgage – Because filing for bankruptcy affects your credit score, it will be difficult to obtain a mortgage until at least five years has gone by.
3. 3. Lose Credit Cards – You will lose all of your credit cards. Think of it as no new trips, clothes, or furniture purchases for you for the next decade without cash in hand.
4. 4. Embarrassment – When you declare bankruptcy, your name will be in court records and may also appear in the newspaper. Additionally, you and your bankruptcy attorney will need to explain to a judge how you ended up in this financial situation in the first place.
5. 5. Not all Debt is Discharged –Certain debts will not be discharged such as: past due child support, alimony payments, debts from a divorce settlement, student loans, income taxes that are less than 3 years past due, and debts incurred by fraudulent means. Your bankruptcy attorney should be able to tell you which of your debts are not eligible for Chapter 7.

Before you file for Chapter 7, consider the pros and cons of Bankruptcy. Though bankruptcy attorneys will often paint this as an easy solution to mounting financial pressures, its not that simple. Assess your financial situation before you file and make sure you have exhausted all other alternatives to bankruptcy, such as debt settlement companies, before you make a decision.

Joshua Just, a former attorney in New York City, has over 20 years of experience as a lawyer, which gives him unique insight to many legal matters.