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What is Bankruptcy?

Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors.

A declared state of bankruptcy can be requested by creditors in an effort to recoup a portion of what they are owed; however, in the overwhelming majority of cases, the bankruptcy is initiated by the bankrupt individual or organization.

Bankruptcy is a form of financial relief, regulated by federal law, that permits people who can't pay their debts to erase some or all of their debts and in most cases keep their homes and personal property. One form of bankruptcy, called Chapter 7, is intended to erase all debts and give the individual a “fresh start” with no payments required. Another form, called Chapter 13, is a form of court-approved repayment plan which can give an individual anywhere from three to five years to pay off debts. In Chapter 13, in most cases some portion of the debts are erased, with the balance being repaid over time.

Keywords: Bankruptcy law and Procedure Explained. Discharge of Debts. Property Exemptions.
Forms. Filing the Case. Meeting of Creditors. The Role of the Trustee. The Debtor's Duties. Problems and Issues