Valerie looked at the pile of bills on her desk and sighed. She realized that at this point, there was no chance that she would be able to pay off the debts that she had accumulated over the last few years. Between her medical problems and losing her job, she had depleted all of her savings and maxed out all of her credit cards, and could no longer even make the minimum monthly payments on them. Her rent and car loan were past due, and the temporary job that she was working would hardly cover her current expenses. She pushes the bills to the side and decides to talk to a bankruptcy attorney about her situation. One week later, Valerie finds herself filling out the Chapter 7 paperwork.

Unfortunately, Valerie's situation is all too common - in fact, Mark Twain, Walt Disney, Donald Trump and Henry J. Heinz all filed for bankruptcy at some point in their lives. If you think bankruptcy could be looming for you as well, read on to discover what you can expect and what to watch out for after filing for personal bankruptcy.

You've Filed - Now What?
For the individuals who have declared bankruptcy, the recovery process is long and difficult. The first step comes when you and your bankruptcy trustee meet with your creditors to inform them of the bankruptcy, at which time any non-exempt assets that you have must be liquidated. (To see a full list of asset exemptions, check out DaveRamsey.com.) You will be allowed to keep your furniture, your car and your personal belongings up to a certain value, but any non-exempt liquid assets such as cash or certificates of deposit (CDs) must be turned over to a court-appointed trustee. But liquidating your assets is only the first of many issues that must be dealt with as the consequences of your bankruptcy begin to unfold. (To learn more about assets and the actual bankruptcy process, see What You Need To Know About Bankruptcy.)

Getting a loan of any kind will be extremely difficult for the next couple years, although it is possible to regain a better score and even some types of loans after only a year. However, the lenders that will finance you will probably be from finance companies that charge exorbitant rates of interest. In some cases, it may not be possible to get credit at all for major purchases, such as a car or home. These issues will remain for the next 10 years under a Chapter 7 bankruptcy. If you file a Chapter 13 bankruptcy instead, this kind of bankruptcy will often disappear from your credit report after only seven years. However, this type of bankruptcy also requires that you pay back all of your debt within three to five years according to a set payment plan. Because there are six types of bankruptcy filings, it is important to contact your lawyer to make that you file the one that best suits your financial position.