James Falla, chief executive of debt consultancy Thomas Charles, said that those going bankrupt could lose their home and it could even affect their job.
Speaking on BBC Radio 5’s Wake up to Money, Mr Falla said: “There is a lot of talk at the moment about whether bankruptcy is an easy option and, in my opinion, it is not.
“It will be difficult to get back into the property market. It is also a public thing so your name and address is published in local newspapers.”
His comments come amid concern that recent rule changes to declaring insolvency may make more people look at bankruptcy as a means to get out of debt.
ClearDebt marketing director, Andrew Smith, agreed that, especially for property owners, bankruptcy was the “nuclear option”. However, for some indebted individuals, it was still the best course of action.
“For those with few assets, and often for younger debtors, bankruptcy can seem like a ‘get out of jail free card’ and, if they can cope with the stigma that still exists, it can enable you to walk away from your debt. It is not always the wrong thing to do,” he said.
Mr Smith called on lenders to re-assess their attitudes to those who successfully complete IVAs: “IVA completers have five years of successful budgeting and personal financial management behind them.
“Many won’t ever want credit again – but those that do are, in ClearDebt’s view, likely to prove a good risk for lenders and should not be penalised for old failures.”