what is bankruptcy

Bankruptcy is a legal process that helps people or businesses who are unable to repay their outstanding debts or obligations. It offers a fresh start for people who can no longer pay their debts by forgiving debts that they cant pay, while creditors have a chance to get some repayment based on the individuals or businesss assets available for liquidation. Bankruptcy is handled in federal courts, and rules are outlined in the U.S. Bankruptcy Code. There are different types of bankruptcies, which are usually referred to by their chapter in the U.S. Bankruptcy Code. Individuals may file Chapter 7 or Chapter 13 bankruptcy, depending on the specifics of their situation. Municipalities, businesses, family farmers, and fishermen may also file for bankruptcy under different chapters. Bankruptcy can affect ones ability to receive credit in the future and may stay on ones credit record for as long as ten years. Seeking the advice of a qualified lawyer is strongly recommended because bankruptcy has long-term financial and legal consequences.