Bankruptcy is a lawfully affirmed incapability or impairment of ability of an individual or organization to pay their creditors. Creditors may file bankruptcy for a debtor in an effort to recoup a portion of what they are owed. In the most of the cases, bankruptcy is initiated by the debtor.
The main reason of bankruptcy is to give an honest debtor a fresh start in life by reducing the debtor of most debts, and to repay creditors in an orderly manner to the extent that the debtor has the means available for payment. Bankruptcy allows debtors to resolve debts through the division of non-exempt assets among creditors. In addition the declaration of bankruptcy allows debtors to be discharge most of the financial obligations, after their non exempt assets are dispersed, even if their debts have not been paid in full.
