KEYTAKEAWAYS
- Navigate financial distress legally—bankruptcy empowers individuals by appointing a trustee to manage assets, offering a fresh start amid financial challenges.
CONTENT
Definition
Bankruptcy is a legal process that occurs when an individual or entity faces insurmountable financial challenges and is unable to meet their financial obligations. In such cases, a formal declaration of bankruptcy is made, and an appointed trustee assumes control over the debtor’s assets and financial affairs.
The goal of bankruptcy proceedings is to fairly distribute assets among creditors and provide the debtor with an opportunity for a fresh financial start. Different forms of bankruptcy exist, with Chapter 7 involving the liquidation of assets to pay off debts and Chapter 13 allowing for a structured repayment plan.
Bankruptcy provides a legal framework for managing financial distress, offering a balance between the interests of creditors and the opportunity for debtors to rebuild their financial lives.
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