Choosing a bankruptcy will seriously damage your credit score more than just about any other debt relief solution. Bankruptcy will virtually destroy your credit score for many years. Most people understand, after a bankruptcy, they will not be able to get loans but few people realize that bankruptcy will impact their entire life and that of their family in many other negative ways.

On the positive side, bankruptcy is a legal proceeding that either forgives you of your debts or allows you to pay off just a small fraction of your debt while erasing most of your debt. While bankruptcy will nearly ruin your credit rating, it will also allow you to escape overwhelming debt. This gives you a clean slate and a chance to rebuild a good credit rating in the ensuing years. A bankruptcy will no longer show up on your credit report after ten years.

If you are very seriously in debt and have no way of repaying your bills, a bankruptcy can help you by stopping collection agencies from contacting you. Also, if you have been very negligent in paying your debts, your credit rating has already likely suffered greatly so bankruptcy may make little difference in your credit score.

Bankruptcy is especially advantageous if you have large debts that you could never pay off no matter what you do.

On the negative side, going bankrupt is no longer an easy way out and you'll need to pay legal fees up front. New federal law makes it tougher to declare bankruptcy. Creditors can challenge you. If the court finds you have an income or assets that could pay back some of your debts, you may still be forced to pay back some or all of your creditors instead of all out bankruptcy. You need advice to decide your best legal options.

Make no mistake, going bankrupt is a very serious step. It is not just a 'black mark' on your credit report, it is a huge warning sign to lenders. After a bankruptcy, you will be unable to get credit cards, many other types of credit, and will even be told what you can and cannot buy. The whole process can also be emotionally draining. Bankruptcy should only be chosen as a last option if you really require your debts to be forgiven because you have no way of repaying them.

Choosing whether to go bankrupt requires some professional advice.

Bankruptcy advisers can help you decide whether to seek bankruptcy and how to proceed once you do decide to file. Then, a lawyer is hired to represent you in bankruptcy proceedings. This will likely cost you more than $1,000 payable in advance depending on the law office you hire.

Filing for bankruptcy can be emotionally upsetting and even embarrassing for you and family members. On the day you are finally judged to be bankrupt, you may have to appear in Federal Court, along with many other people in the same situation. Your name may be called out in open court and your name may even appear in the Legal Notices of your local newspaper. It is not a pleasant experience.

From that moment on, every time you apply for credit, apply for a job that requires you to handle money, or even apply for some more exclusive types of apartment living, your credit score is checked. In fact, your credit score can be checked by anyone with a legitimate business need to do so. Your bankruptcy will be there for all to see.

Your credit score is based on how you have managed your past financial responsibilities and past payments and credit, and it provides potential lenders with a quick snapshot of your current financial situation and past repayment habits, including your recent bankruptcy. In other words, your credit history gives lenders a picture – quickly - of how responsible or irresponsible you are.

Some people who go bankrupt feel like a failure as a person. Remember, your history is represented by your FICO credit score but it's just a number. It is not a personal reflection of you as a person.

It's true that lenders use credit scoring to make an educated guess as to whether you will repay your bills in the future and credit scoring is based on information gathered from studying other people in circumstances such as yours. The group you fit into determines your score. Thus, it's nothing personal. It's just facts and figures run through a computer program. So, go easy on yourself.

Let me finish with a word of caution. Many people who go bankrupt try to lie about the fact that they have gone bankrupt because they are ashamed while others are just plain dishonest. Not only is this illegal, it is also useless to do so. Your credit score is easy to check. You will not fool lenders by lying and you may actually find yourself facing a judge as a result of your dishonesty.