• Is bankruptcy worth it?failure image by Alexander Oshvintsev from Fotolia.com
  
  According to Laura Cohn, associate editor at Kiplinger's Personal Finance Magazine, personal bankruptcy is a last resort. A chapter 7 bankruptcy filing wipes out most of your debts, but only after your assets are sold off to satisfy your creditors. Under a chapter 13 filing, the court approves a payment plan for you to repay your debts over time. Either form of bankruptcy stands to have far-reaching consequences even though, says Cohn, it offers a "fresh start."
  
  

Credit Report and Score

• The most far-reaching consequence of bankruptcy involves the hit your credit report will take. As Don Taylor, CFA, of Bankrate.com notes, a chapter 7 bankruptcy filing stays on your credit report for 10 years. Worse yet, according to Cohn, some experts say your credit score could drop by about 100 points.
  
  

Future Credit

• Taylor points out that obtaining future credit, namely credit cards, is an uphill battle after a bankruptcy. If you want to buy a home, qualifying for a mortgage will be difficult, especially if the bankruptcy is recent. If you do get a loan, you will pay high interest rates, according to Maxine Sweet, a bankruptcy expert at Experian. She advises getting a couple of credit cards, if you can, and paying them on time. Sweet notes that it can take years, but building strong credit after bankruptcy can happen if you take the proper steps.
  
  

Housing, Jobs, Insurance

• Your credit report not only affects your ability to obtain credit, but bad credit can hurt your chances of securing an apartment, getting a job or promotion and receiving the best insurance rates. Steve Rucci, an editor at Bankrate.com, says that landlords, employers and insurance companies often use your credit report to make decisions that directly affect your future as well as your bottom line. For instance, Rucci notes, that when handing out preferred rates, insurance companies often use information on your credit report to determine your worthiness. Employers look at your credit report to measure your trustworthiness and character, though, some balk at this practice, according to the Los Angeles Times, calling it unfair.
  
  

Student Loans

• Federal student loans are typically not included as part of a chapter 7 bankruptcy. According to the State of Michigan, if you default on your student loans before, during or after a bankruptcy, you will need to make six payments to a court-appointed trustee in order to regain federal loan eligibility. If you do not default on your student loans, you will still be eligible for federal education assistance consistent with federal education and bankruptcy laws.
  
  

Impact on Spouse

• Taylor points out that if you are married, filing bankruptcy could negatively impact your spouse. While debts that are the individual responsibility of your spouse do not show up on your credit report, creditors can still come after what is known as "community property" to satisfy the past due obligations. If you live in a community property state--Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin--creditors are able to go after most assets acquired during marriage.