Bankruptcy is defined as a legal status of a person or business entity who cannot

repay their unpaid debts. In other words, it is when an individual or business

entity is legally unable to repay their debts due to lack of financial resources.
The purpose of bankruptcy is to provide an avenue to resolve debt and financial
hardship in a fair and orderly manner.

When a person or business entity files bankruptcy, their assets are collected and
their liabilities are determined. Assets typically include property, vehicles,
savings, investments, and other items of value. Liabilities are then determined by
what is owed to creditors, such as loans, credit cards, store accounts, and other
debts.

When an individual or business entity is declared bankrupt, all creditors are

included in the bankruptcy process. This means that creditors are not allowed to
pursue the individual or business entity for collection of any debt owed as they
are prohibited by law. This applies to all types of debt, including unsecured and
secured credit cards, store accounts, and other loans.

All bankruptcies are recorded in a court registry. This registry is available to be

viewed by creditors and other parties, but it is not widely published. This allows
the individual or business entity to make a fresh financial start without having to
continuously face bad credit or past debts.

The advantages of filing bankruptcy includes the protection of assets, the

protection of wages, and the prevention of debt collection. However, there are some
drawbacks to filing bankruptcy, such as a negative effect on credit score, the
inability to obtain new credit for a certain period, and potential limitations on
the types of employment obtainable.

All in all, bankruptcy can be a beneficial tool for individuals or businesses

struggling with financial hardship. It can provide protection from creditors and
allow an individual or business entity to make a fresh start. While there are some
drawbacks to filing bankruptcy, it can be an avenue for individuals and businesses
to begin restoring financial order.