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Filing for bankruptcy can seem like hitting the reset button on your financial life.

“In a nutshell, it gives somebody a fresh start by discharging certain debts, wiping those debts off the record, and giving that person a fresh start with which to rebuild at that point,” explains certified consumer credit counselor Chris Dlugozima.

But attorney Jay Fleischman says don't be fooled into thinking it's a get-out-of-debt-free card.

“In spite of what many people think, it just isn't the case,” says Fleischman. “What bankruptcy really is, is a way that the law balances the interest of your creditors, the people that you owe money to, against what it is that you can reasonably afford to pay them.”

There are two different options for filing bankruptcy. First, there is Chapter 7 – where the outstanding debt is discharged by the court. Then, there’s Chapter 13, where a consumer works out a repayment plan over three to five years.

While there are some cases where bankruptcy is the right move, experts say it’s a decision that needs to be weighed carefully – because it carries some lasting repercussions, lingering on your credit report for 10 years.

“Declaring bankruptcy has a devastating effect on your credit score,” warns Cathie Mahon, deputy commissioner for financial empowerment at the Department of Consumer Affairs. “So if you declare bankruptcy, it's going to be much more difficult to be able to get a mortgage loan, a car loan, any kind of affordable credit card lines.”

“It can affect things such as getting a job, even your auto insurance rates,” adds Dlugozima. “Those are things people looking to file bankruptcy aren't really thinking about at the time.”

However, Fleischman argues it won't be impossible to get new credit, even in less than two years, but adds it will be more expensive.

“When I talk about new credit, it's not only credit cards, but mortgage loans, albeit at a higher rate, car loans, albeit at a higher rate,” he says.

While the recession has seen an increase in the number of businesses offering bankruptcy counseling services, the Department of Consumer Affairs warns not all of them are necessarily reputable. Her advice: do your homework before you ask for help.

“It's best to go through an organization that has been certified in bankruptcy counseling to learn all the different venues that are available to you,” says Mahon. “There may be free legal services available. In some cases, there may be pro bono attorneys available or at least you'll be able to get directed to reputable and responsible attorneys who can help you.”