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Bankruptcy

 Bankruptcy is a legal process that provides relief to individuals or businesses that are unable to repay their outstanding debts. Here are some key points about bankruptcy: Types of Bankruptcy: Chapter 7: Also known as liquidation bankruptcy, it involves selling the debtor’s non-exempt assets to pay off creditors. Any remaining unsecured debts are typically discharged12. Chapter 13: This type allows individuals with a regular income to create a repayment plan to pay off all or part of their debts over three to five years12. Chapter 11: Primarily used by businesses, it involves reorganizing the debtor’s business affairs, debts, and assets12. Chapter 12: Designed for family farmers and fishermen to restructure their finances and avoid liquidation12. Chapter 9: Applies to municipalities, such as cities or towns, allowing them to reorganize their debts12. Chapter 15: Deals with cross-border insolvency cases involving debtors, assets, and creditors in multiple countries12. Process: The process begins when the debtor files a petition with the bankruptcy court. This can be done by an individual, a business, or a municipality12. A trustee is appointed to oversee the case, manage the debtor’s assets, and ensure creditors are paid as much as possible12.The court will determine whether the debtor is eligible for bankruptcy and decide on the discharge of debts12. Impact: Bankruptcy can provide a fresh start by discharging many types of debts, but it also has long-term financial and legal consequences12. It can significantly impact the debtor’s credit score and remain on their credit report for up to 10 years12.