When you owe more money than you can repay you may decide to file for bankruptcy. Bankruptcy filings may be made by either individuals or companies in a federal court. Filing for bankruptcy allows you to either have your debts discharged (erased) or to set up a payment plan so you can repay those people who you owe money. While bankruptcy may be the right solution in some situations, it has long term consequences, such as a bad mark on your credit report. It’s harder to obtain new loans when you have filed for bankruptcy.