Bankruptcy

Bankruptcy is a legal process that allows individuals, businesses, and other

organizations to declare their inability to pay their debts in full while still being
able to repay some or all of those debts over time. When a company or individual
declares bankruptcy, they are essentially seeking protection from their creditors,
who must cease all collection efforts.
The process of filing for bankruptcy begins with determining which type of
bankruptcy is best suited to the individual's or company's circumstances.
Bankruptcies are classified into two types: Chapter 7 and Chapter 11. Chapter 7 is
a liquidation bankruptcy in which non-essential assets are sold and the proceeds
are used to pay creditors. A Chapter 11 bankruptcy is a reorganization bankruptcy
in which a company creates a repayment plan for creditors while continuing to
operate.
After deciding on the type of bankruptcy, the next step is to prepare and file the
necessary bankruptcy papers. The bankruptcy petition, schedules of assets and
liabilities, and a list of the debtor's creditors are all included in these papers.
Following the filing of these papers with the bankruptcy court, a trustee is
appointed to manage the debtor's assets and ensure that they are distributed
equitably among the creditors. The bankruptcy process can take several months,
but at the end, the debtor is usually granted a discharge of their debts and is able to
begin again with a clean financial slate.