Bankruptcy is a legal proceeding that begins when a person or company is unable to pay outstanding debts or obligations. The bankruptcy process begins with a petition filed by the debtor, which is the most common, or on behalf of creditors, which is less common. Bankruptcy Basics provides general information about federal bankruptcy laws and the bankruptcy process. It is not a guide to filing a bankruptcy case.
Bankruptcy law provides for the reduction or elimination of certain debts and can provide a schedule for repaying unliquidable debts over time. It also allows individuals and organizations to pay back guaranteed debt. Secured debt is generally a debt with real property or personal property, such as vehicles pledged as security, often on more favorable terms for the debtor.
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