Bankruptcy is a legal process through which individuals or businesses can seek relief from some or all of their debts. When a person or organization is unable to meet their financial obligations, they may choose to file for bankruptcy to protect themselves from creditors.
Bankruptcy laws aim to help individuals and businesses eliminate their debts or repay them under the protection of the bankruptcy court. There are various types of bankruptcy, each outlined in the U.S. Bankruptcy Code, known as “chapters,” such as Chapter 7 (liquidation), Chapter 11 (large business reorganization), and Chapter 13 (individual debt adjustment).
While bankruptcy can provide a fresh start by discharging debts, it is also a serious legal process that can have long-term consequences. For example, it can significantly affect a person’s credit score and ability to borrow money in the future.
For more detailed and specific information, consulting a legal professional or appropriate financial adviser would be beneficial. It is also recommended to review relevant legislation, such as the U.S. Bankruptcy Code, for an in-depth understanding.
Related Real Estate Terminology
- Chapter 7 Bankruptcy
- Chapter 11 Bankruptcy
- Chapter 13 Bankruptcy
- Foreclosure
- Debt Restructuring
- Liquidation
- Automatic Stay
- Creditors’ Rights
- Bankruptcy Trustee
- Insolvency
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