What is Bankruptcy?

Bankruptcy refers specifically to a legal process that provides individuals or businesses the opportunity to reduce or eliminate their debts under the supervision of the court. This process is designed to help debtors who cannot meet their financial obligations get a fresh start. In bankruptcy, a debtor may restructure their debts to make payments more manageable or may have certain debts discharged, meaning they are no longer legally required to pay them.

The essence of bankruptcy lies in its foundation as a legal remedy, which sets it apart from options like loan consolidation, tax avoidance strategies, or investment tactics. Instead, bankruptcy acknowledges an individual’s or entity’s financial difficulties while providing a structured environment to address and resolve those debts. It often involves working with bankruptcy courts, creditors, and sometimes financial advisors or attorneys to navigate the complexities of the process.