You know it. Something bad happened and in this economy, bankruptcies are at a record high. Over 1.5 million were filed in 2010 alone. But you know there are several reasons NOT to actually go through with it? It's true. Here are seven very important reasons why you should not file bankruptcy:

1. Bad Credit: A bankruptcy will absolutely negatively effect your credit. A Chapter 7 or Chapter 13 bankruptcy can actually put a big black mark on your record for as long as 10 years, and your credit score drops 150 to 250 points according to some studies. This could spell trouble in many avenues, not just for when you need get a loan.

2. You CAN lose your property: A lot of people don't know that if a creditor doesn't get enough of a payout they can sue and depending on your state's laws and your own personal situation, you can lose your car and your home if you have one.

3. Financial Trouble: Bankruptcy can do a lot more than just mess up your life. It will make it difficult to rent or own a home or car, and if you don't disclose the reason to your employer, it will mess with your security clearance.

4. Some retirement Plans Are Not Protected. Very few programs are actually not sold or borrowed against in a bankruptcy in some states. Items like a 401k may be hit in order to pay back the money during a bankruptcy. If you have assets that protect you, then you probably should try to avoid bankruptcy at all costs.  Of course it is best that you review this aspect of bankruptcy with an attorney who is licensed in your state.

5. You may still owe a debt.  If you reaffirmed your auto and home loans and kept the property, you are not relieved of the debt associated with it.

6. You may not get new credit for a long time. A bankruptcy stays on record for 10 years. Even getting a secured loan may be problematic for 2 to 4 years, and if you declare bankruptcy, it will take even longer to get an unsecured loan. The only way you may avoid this is with a secured credit card, which might have a high interest rate and fees.

7. You may still owe money: No, declaring bankruptcy does not eliminate all debts. There are certain debts that cannot be discharged even after you say you're bankrupt. This includes student loans, child support, alimony, back taxes, and certain judgments can't be discharged.

There are alternatives to total bankruptcy. Always look with good debt relief companies to see what your choices are, and whether debt consolidation or negotiation may be better.

When a bankruptcy case receives a “discharge” it means that the consumer is released from certain specified types of debts, or that he/she is no longer legally or personally liable to pay debts that the bankruptcy court has already forgiven; but sometimes certain items survive bankruptcy, and the creditors would naturally try to resume collection from the consume

If it is the prerogative of a consumer to not hire a lawyer and instead go at bankruptcy alone, the consumer has to make sure of the following before tackling the giant: That his/her amount of debt is large enough to warrant all the trouble and that his/her debt is primarily “dischargeable” and that the creditors would not challenge the discharge.

The consumer should first check the court’s local rules regarding “voluntary dismissals” and find out the time limit, types of papers to be submitted (Petition for Voluntary Dismissal and Order Granting Voluntary Dismissal) and all the other requirements because those rules vary per district.

If the consumer is aware that he/she is legally going to be receiving assets (money, properties, anything of value, etc.) at the time he/she filed bankruptcy then those would fall under the bankruptcy estate.

Individual consumers may represent themselves "pro se,” or without an attorney, in the bankruptcy court but to go through the whole bankruptcy process without legal aid is going to be quite an adventure. The consumer might actually regret not seeking the assistance of a bankruptcy professional, when he/she missteps in filing his/her papers and documents, and when it leads to the case being dismissed.

The term “good faith” in bankruptcy does not have an official definition. It is a phrase that refers to the consumer’s honesty or trustworthiness in his/her papers or declarations. If the consumer truly filed bankruptcy with the intention of wiping the debts so as to be able to start over and then he/she actually makes all the payments specified in his/her Chapter 13 case, the objection should not get in the way of his/her petition.

If the consumer has what it takes to make up payments in the future (bankruptcy is a long and tedious process) then he/she can file Chapter 13.  The consumer must make sure that he/she can sustain these payments for at least three years.

•    The consumer should proceed to the clerk of the Federal Bankruptcy Court that is serving in his/her area.
•    He/she should submit the Individual Debtor's Statement of Compliance with the certificate of completion from the credit counseling course.
•    Wait for the court to send out the notice of his/her Chapter 7 bankruptcy case. The consumer should know that the court is about to inform the creditors that he/she has filed bankruptcy.

For the consumer, if a creditor suddenly pops out of nowhere claiming that the consumer owes him/her a substantial amount, then it is imperative for the consumer to ask the bankruptcy court to reopen the case, let that creditor be added to the Mailing Matrix, add that particular debt to the discharge, and then reclose the case.

However, since bankruptcy is a legal issue, the consumer should be more concerned about the legal fees (lawyer’s fee). Rates may be based on where the consumer lives but it is typically in the $1,500 to $2,000 range for Chapter 7 and $2,500 to $4,000 for Chapter 13. The more work for the lawyer, especially as bankruptcy laws change, the more the fees add up.

Foreclosure is the legal process by which a lien against a consumer’s property is enforced by the lender or creditor through the taking and selling.
The consumer who is facing foreclosure may panic and file bankruptcy immediately  (which is not such a bad idea considering that both Chapter 7 and Chapter 13 can stop collection calls and property sale via a court issued Order for Relief)  to avoid losing his/her home but there are other options for the consumer to explore.

It is, as long as the creditors have not filed the Motion to Lift Stay, but more often than not, they are going to petition for it, in order to start collecting from the consumer again, at least until the debts are satisfied. The court then would set a hearing and send the consumer a notice. A certain period of time would be given to the consumer to file a response, but in some districts, even if the consumer decides not to file a response, he/she can still appear in court to argue against the lifting of the stay.

In a Chapter 7 case, if the consumer fails the means test he/she is presumed to abusive of the bankruptcy laws, and he/she would not be allowed to proceed unless proven otherwise. For a presumption of abuse to halt the consumer’s bankruptcy petition, either or both the Trustee and the creditors must file a request and motion for hearing to dismiss the case or have it converted to Chapter 13.