Some reasons to avoid filing bankruptcy
Filing for bankruptcy relief basically amounts to a declaration that you are no longer able to meet your financial responsibilities and therefore need the courts to intervene to provide you with some relief. However, a Sacramento bankruptcy lawyer can only do so much and there many debts that can not be discharged (back taxes, student loans, and so on) the process has also become much more complicated and expensive. In general, you should expect to pay between $1,000 and $2,000 in fees, credit counseling and attorney fees to successfully file for bankruptcy with no guarantee that all of your debt will be discharged.
Beyond the fact that bankruptcy may not solve all the problems as thoroughly as you may think, the bankruptcy will remain on your credit report for the next ten years. You can expect it to be about eighteen months before you qualify for a new credit card and somewhere between three and five years before you can qualify for mortgage. Not only will getting future loans be more difficult and granted under less favorable terms, since your credit report is also used by many non-lenders like potential landlords and employers to determine whether they want to deal with you, there can be many possible ramifications to having a bankruptcy on your credit report that you have not considered.
When dealing with a Chapter 7 bankruptcy, by far the most common variation used by individuals, you also have to expect your nonexempt assets to be taken by the court, liquidated through auction and the money distributed to your creditors at the discretion of the court. While you primary residence and vehicle are probably exempt, other properties, recreational vehicles, and other high value assets may well fall under the status of being nonexempt. Further, the government auctions that are used to liquidate your property typically fetch amounts much lower than the actual value of the items.