The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law. It is designed to give you a fresh financial start. What Bankruptcy Cannot Do Bankruptcy cannot, however, cure every financial problem. Nor is it the right step for every individual.
Common examples are car loans and home mortgages.
You can force secured creditors to take payments over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money if your property is taken. Nevertheless, you generally cannot keep the property unless you continue to pay the debt. When a relative or friend has cosigned a loan, and you discharge the loan in bankruptcy, the cosigner may still have to repay all or part of the loan. Most people filing bankruptcy will want to file under either Chapter 7 or Chapter 13. Either type of case may be filed individually or by a married couple filing jointly.