Bankruptcy

Bankruptcy is a legal proceeding initiated when a person or business cannot repay outstanding debts or obligations. It offers a fresh start for people who can no longer afford to pay their bills. The bankruptcy process begins with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common. All of the debtor's assets are measured and evaluated, and the assets may be used to repay a portion of the outstanding debt.

Key Points
Bankruptcy is a legal proceeding carried out to free individuals or businesses from their debts.
Creditors still have an opportunity for repayment with the bankruptcy process.
Bankruptcy is handled in federal courts, and rules are outlined in the U.S. Bankruptcy Code.
A bankruptcy will stay on your credit reports for a number of years, making it more difficult to borrow in the future.
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