Bankruptcy. Most people in debt consider bankruptcy, but usually they don't understand the consequences of this huge decision until it is too late.

You may feel forced to choose bankruptcy, due to the feeling of hopelessness and harassment by creditors and collectors. They can apply a lot of pressure to you, even threatening to sue you or put a lien against your home.

Bankruptcy may seem like the light at the end of the tunnel, offering an end to harassment and to the debt merry-go-round, but it can be very traumatic. There is still a stigma associated with bankruptcy. It is commonly viewed as failure and weakness.

Plus, bankruptcy is devastating to your credit. Many lenders won't look any further when they see your big secret in black and white on your credit report. A Chapter 7 can be reported for 10 years, and a Chapter 13 for 7 years. And that is just the bankruptcy itself. Although the debts you include in your plan may be reported as "discharged in bankruptcy", they may continue to be visible to anyone checking your credit.

Like any other option , there are good and bad sides to bankruptcy. However, this particular choice offers many more negative effects than positive.

The Good:

May halt any legal actions being taken by your creditors, including foreclosure, repossession or garnishment.

Will discharge your debts in most cases. (There are some debts you cannot include in a bankruptcy without taking a chance on losing assets secured by the loan).

The Bad:

Even if you file bankruptcy you are still expected to stay current on your home and vehicle, otherwise you can lose these assets.

Your bankruptcy is part of the public record. Anyone will be able find out you filed for bankruptcy.

You will give up control of your assets to the court.

It stays on your master credit report for life and can make some types of credit nearly impossible to get. Even when you are once again able to qualify for a loan, you'll pay more interest due to your bankruptcy.

For the rest of your life, you'll have to answer yes to the question "Have you ever filed bankruptcy?" on applications, forever reminding you of the pain of your decision.

Filing bankruptcy may permanently disqualify you from some high-level or sensitive positions, and can prevent you from becoming bonded.

Bankruptcy does nothing to help you modify your behavior so you don't continue to make the same mistakes and end up in the same situation down the road.

Sometimes bankruptcy is not enough. Some people file and still have difficulty making ends meet, having mistakenly thought that bankruptcy would end their worries.

Upcoming changes in the bankruptcy codes could make it even more difficult.

Congress is working on passing legislation that will keep some people from filing for Chapter 7 bankruptcy, and will instead force you to attempt a credit counseling program, then may only allow you to file Chapter 13. The proposed law will also make it harder to discharge some types of debts, including credit card debt. The credit card industry has lobbied hard for this change in law, and as a result it has been written to the advantage of creditors and to the detriment of debtors. As you can see, bankruptcy is not an easy solution and is going to get even more difficult.

Some unscrupulous bankruptcy attorneys may try to talk you into making this important decision on a whim, by downplaying the seriousness of bankruptcy and offering bankruptcy as an easy fix to all your financial problems. This isn't the case, and you should do your research thoroughly before you make a decision. This choice should be made only after carefully weighing all your options and considering the effects that filing will have on your life.