By Victoria Knight

The thought of declaring bankruptcy and being free of your debts or having the option to repay them slowly with he courts protection may seem tempting but be warned, it can have long term effects on your life in terms of credit, mortgage rates and credit card offers.

Filing for bankruptcy

The first thing you should do is seek the services of a reputable bankruptcy attorney. Your local or state bar associations should be able to refer you to one. When you go meet the attorney, remember to take all your financial documents such as bank statements, paycheck stubs, copies of any mortgages and car loans and any outstanding bills.

Your petition (bankruptcy paperwork) must contain every debt you owe. If you’re found lying in your petition, even by inadvertent omission, you could be fined or sent to jail.

Your attorney will ask you about your secured debts; these are debts in which creditors hold a security interest in your unpaid assets such as mortgages and cars, if these are unpaid, they can be repossessed. He will also ask you about your unsecured debts such as credit cards and various bills.  Some debts which don’t get removed by filing bankruptcy are child support, delinquent taxes and student loans.

You must disclose any earned income within the last six months otherwise your case will be rejected. » Read more: Finances: Declaring Bankruptcy