Answer: There are quite a few pitfalls, the main one being a loss of property if it is not protected in bankruptcy. So in bankruptcy, you have to declare all of your assets and if those assets are worth something, the person overseeing the bankruptcy could decide to sell those assets; those become property of the bankruptcy court and those assets could actually be sold. So if they’re not protected in some way—and some assets are protected, some of the basic stuff. But if you have any assets beyond that, then it’s going to be sold in the bankruptcy and you’re actually going to lose out on your property. All credit cards will be shut down and you will lose your credit cards. It’s going to be impossible to get a mortgage for a period of time. It affects your credit score for a minimum of seven to 10 years.
And there’s also pitfalls that have to do with timing of filing for bankruptcy. Some people who are really struggling with debt go ahead and file and then find out that they should have waited longer in order to discharge the most amounts of their debts. For example, people having medical issues, sometimes there’s medical bills that can be discharged, but you want to make sure that that process is complete before you file in order to discharge the maximum amount. Where people really run into criminal problems is if a person is not completely honest and forthright and does not declare all of their assets and all of their income and make a full declaration in the bankruptcy code as required, then you can face criminal penalties as well.