As credit card bills begin to stuff our mailboxes, many consumers are faced with the hard reality that they went overboard with their holiday shopping. And for those who don’t pay the balance due in full, you’ll also wind up paying interest charges. For some people this can be the beginning of the end as they can’t see a way to manage the burden of their credit card and other debts.

“Wipe the slate clean”, “escape the pressure of credit card debt”, “call our bankruptcy hotline for an easy way out” the bankruptcy lawyers proclaim in their slick television commercials. Last year 1.6 million people filed for bankruptcy in the U.S. Is bankruptcy the right answer for your debt problems? Make sure you have the facts before making a decision that has lingering effects.

A bankruptcy stays on your credit report for 10 years. You’ll be able to get credit in the future, but at higher interest rates, even after your bankruptcy is completed.

A bankruptcy does not “wipe the slate clean” nor does it mean you are totally debt-free. Alimony, child support, back taxes and most student loans are not exempt from bankruptcy proceedings.

There are two basic types of personal bankruptcy: Chapter 7 and Chapter 13. Both must be filed in a federal bankruptcy court. You will have to pay about $160.00 in court fees. Attorney fees are additional.

Chapter 7 bankruptcy involves the liquidation of all your assets that are not exempt from the bankruptcy settlement. Exempt property may include automobiles, some household furnishings, and property needed for work-related use; for example if you were a mechanic the tools you use to perform your work would be exempt from the bankruptcy settlement. Exemption dollar amounts vary from state to state.

Under this plan the court appoints a trustee to handle the liquidation of your nonexempt property. The trustee can sell or turn over your property to your creditors if you have more than the allowed equity.

A Chapter 13 bankruptcy allows you to keep property, like a mortgaged house (provided there are no liens on it) or a car, as long as you have a steady income. A Chapter 13 bankruptcy is a court-ordered and approved repayment plan to your creditors, usually over a 3-to-5 year period without surrendering any property. However, any earned income over the budgeted amount for basic maintenance will be distributed to your creditors.

Financial experts agree that a bankruptcy should always be the last resort used for managing your debts. An alternative to bankruptcy is personal credit counseling. Call the Consumer Credit Counseling Services at 800-388-2227 to find an office near you. A professional counselor can help you decide the best way to handle your debt problems.