What is Bankruptcy?
Bankruptcy is the legal method for a debtor to “discharge” or relieve himself of the debts that he owes. While no debtor is guaranteed a total discharge of his debt, most debtors who file for bankruptcy are given such relief. One of the primary purposes of the bankruptcy act is to relieve the honest debtor from the weight of oppressive indebtedness and to provide the debtor with a fresh start.
Bankruptcy is a legal proceeding in which a person (the debtor) who is unable pay his or her bills (the creditors) can get a fresh start. Bankruptcy is started by filing a petition with the Federal Bankruptcy Court. The petition discloses all of the debtor’s financial affairs including assets and liabilities. Filing bankruptcy immediately and instantly, though sometimes only temporarily, stops creditors from seeking to collect debts. Bankruptcy may also eliminate a debtor’s obligation to pay many, if not all, debts incurred prior to the bankruptcy filing.
