Bankruptcy is the state of no longer being solvent. To be bankrupt is to legally acknowledge you are incapable of paying your creditors. For some, filing a bankruptcy is the last solution. For others, it is the only way out of their debt load. There are certain times when filing a bankruptcy may be the right solution to your economic woes. Once you file for bankruptcy, an automatic stay wards off your creditors. It automatically halts lawsuits, foreclosures, any wage garnishments and even collectors. However, filing a bankruptcy may come at a cost. You will have several years of poor credit. You will need to build your credit rating from the ground up. When you seek a mortgage or any other type of loan, you will be faced with higher interest rates. On the positive side, you will be freed of much of your debt. Do note, however, that there are restrictions to what you can and cannot exempt from bankruptcy proceedings. It depends upon the type of bankruptcy, your past behavior and the conditions applied