What is Bankruptcy
Fundamentally, bankruptcy is a legal proceeding brought by individuals and businesses who might be seeking a “fresh start” to free themselves from past financial problems and move forward with their lives unhampered by the pressure and discouragement of pre-existing debt.
When a person who owes more money than he or she can currently repay (a “Debtor”) then a bankruptcy filing may allow the debtor to either repay a portion of the money owed over time or have the entire debt forgiven.
For individuals considering a bankruptcy filing, most will end up filing either a Chapter 7 (commonly referred to as a “liquidation” bankruptcy) or a Chapter 13 (commonly referred to as a “reorganization” bankruptcy). The Bankruptcy Code and Federal Rules of Bankruptcy Procedure will help determine which type of bankruptcy a debtor will be eligible for.