Pro and Con: Warning

• A successful bankruptcy is an overall pro and con. A successful bankruptcy petition will either eliminate most debts or allow people to pay a greatly reduced amount to their creditors. However, the bankruptcy will appear in their credit file for ten years.
  
  

Pro: Features

• Debts listed in the bankruptcy filing will be discharged (erased) if the borrower's request for protection is granted by the court. "Exempt" assets may remain the property of the petitioner, who will still be responsible for paying any associated debt, such as a mortgage.
  
  

Potential Con: Misconceptions

• The revisions that became effective in 2005 require an "earnings test" that a person must pass or fail (depending on one's perspective) to permit a Chapter 7 petition. Should a person have sufficient earnings to make some restitution to creditors, they will learn a bankruptcy negative as they will need to use Chapter 13 and repay part of their debt.
  
  

Pro: Types

• Chapter 7 bankruptcy discharges all of a person's debts except for those that are associated with "exempt" property, which often includes autos, homes and some personal assets. People enjoy a fully clean start to financial lives.Chapter 13 bankruptcy allows the debtor to pay a reduced amount for all debts included in the petition.
  
  

Con: Reality

• Bankruptcy is not a painless cure. The ability to get a reasonable mortgage loan is difficult for the first two years after bankruptcy. Some lenders still look at recent bankruptcy as a negative.