Bankruptcy is a legal proceeding through which a person can eliminate (or “discharge”) some or all of their debt.

Bankruptcy law is meant to balance two competing goals: allowing individuals who have no reasonable chance of paying off their debts a way to start off with a clean slate and, conversely, allowing creditors a chance to cut their losses, and collect some of what is owed to them in an orderly fashion.

For a person drowning in debt, bankruptcy can be an absolute lifesaver. However, navigating the process can be complex, and if any mistakes or miscalculations are made, it can end up doing more harm than good. And even if you do everything perfectly right, bankruptcy still has some serious costs that must be weighed against its benefits.

Among other things, when you file for personal bankruptcy, you will not be allowed to do so for several years after. Also, going bankrupt will badly damage your credit rating, and the record of the bankruptcy will stay on your credit report for up to 10 years.

And that’s if you do everything right. There are some common mistakes that might cause the bankruptcy process to take longer, derail it altogether, or even lead to criminal charges.

First of all, when you are filing for bankruptcy, you must present the bankruptcy court with an itemized list of virtually every piece of property you own, and its value. Because some property might have to be surrendered to help pay some of your debt, the law takes very seriously the requirement that you disclose all of your assets. If you fail to disclose any asset that you own, and the court finds out, your bankruptcy will be put in jeopardy, at the very least. There’s also a chance you could face criminal charges punishable by prison time, and very large fines. Furthermore, giving away or selling large pieces of property right before you file for bankruptcy is viewed with a great deal of suspicion. While you may have a legitimate reason to do this, you might be forced to prove that it wasn’t for the purpose of hiding assets from the bankruptcy court.

Secondly, it’s essential that you speak with your bankruptcy lawyer about the nature of your debts. While most unsecured debt (debt not secured by any type of collateral – examples include credit card debt and medical bills) can be discharged in bankruptcy, there are a few types that can’t be, including student loans, most back taxes, child support, and court judgments arising out of a personal injury case involving drunk driving. If most of your debt is non-dischargeable, filing for bankruptcy is almost certainly not a good option.

Third, you should go into a bankruptcy knowing what you want to do about your secured debts. A debt is “secured” when some type of property is attached to it, such as a house (in the case of a mortgage) or a car (car loan). If you want to discharge secured debts, you will often have to give up the property that secures them. If you do this, it doesn’t matter if the property is worth far less than what you owe – the debt will be discharged anyway. However, if you want to keep the property (you need your car to get to work, for example), you can choose to “reaffirm” the debt. This is when you and your creditor agree that a particular debt will not be discharged, and you will continue to make payments on it. Such an agreement must be approved by the bankruptcy court, but this is usually done as a matter of course.

Fourth, and finally, you should make sure to take advantage of every exemption available to you. While, in theory, debtors are required to give up some of their property to pay off at least some of their debts, there are certain types of property that cannot be seized, including social security benefits, retirement accounts, and others. Furthermore, most types of property can be made exempt up to a certain dollar amount. The exact amount varies from state to state. For example, suppose you own a car that’s paid in full. It’s worth about $1,000, and your state provides an exemption for cars up to $2,000. You can claim the car as exempt, and you will not have to surrender it. If your car is worth more than the exemption, you can still claim it as exempt, but you’ll have to pay the difference.

In many cases, low-income debtors find that most or all of their property falls under one exemption or another, so they do not have to surrender much, or any, property.

While some people do successfully represent themselves in bankruptcy cases, a skilled bankruptcy attorney can make the whole process much easier, and make these pitfalls far less likely.