If an individual has run into financial difficulties and is unable to pay their bills then this is a way to start anew. The federal law makes it possible for an individual to file for bankruptcy. All cases of bankruptcy take place in federal court.
It is important to note that your creditors cannot expect repayment of any debts while you are tied up in bankruptcy. Arrangements for when and how you are to pay your debts must be decided upon in the court of law.
Please be aware that filing for bankruptcy will affect your credit rating adversely and it will take you some time following bankruptcy to rebuild your credit.
What Can Filing for Bankruptcy Do?
There are many things that bankruptcy can clear the way for you to do.
Bankruptcy can take away the legal obligation that is upon you to pay your debts.
While there are some debts that cannot be wiped away with the help of bankruptcy, many of them can.
This is what is referred to as a discharge of your debts.
If you are presently facing foreclosure on your home, then filing for bankruptcy can provide you the opportunity to breathe a little easier.
It will also give you the chance you so desperately need to catch up on the payments that you have missed.
Be aware however that a bankruptcy will not make your mortgage go away. You are still required to make regular payments. It also does not make any liens that currently exist on your property go away. Payments are still a necessity!
A bankruptcy can make it possible to prevent repossession of your vehicle or any other property you have. It can also help end harassment you are suffering at the hands of collectors and threats of being sued by collectors for repayment.
Bankruptcy can also put an end to wage garnishment. If you have had your utilities cut off because of lack of payment or if you are in jeopardy of this happening, then filing for bankruptcy can improve the situation so you can go back to having lights, heat and water in your home.
The Limits of BankruptcyThe flip side to bankruptcy is the ways in which it is limited. There are things that bankruptcy cannot assist you with. Bankruptcy is not a quick fix for all of your financial woes.
For instance, the rights of secured creditors must be upheld in the event of bankruptcy in most cases. A secured creditor would be someone who has taken either a lien on your property or a mortgage as a form of collateral on a loan.
Examples of these include mortgages for homes and car loans. There are other types of debts that are rarely discharged in a bankruptcy as well. These include child support payments, alimony, some forms of student loans, money owed to the IRS, criminal fines and restitution orders.
If you live in Australia and need more information follow this link - Bankruptcy Advice you might even want to look into debt rescue.