Bankruptcy Definition

If you find yourself in a situation where your income is not enough to cover your monthly expenses, then it may be time to consider bankruptcy. You need to file for bankruptcy if you cannot pay back the money that you owe. The most common reasons people file for bankruptcy are medical bills and high credit card debt. If this sounds like something that might describe your current situation.

When is a good time to consider bankruptcy? If you are drowning in debt, have no way of paying off your bills, and are at risk for eviction or garnishment. The U.S. Bankruptcy Code provides relief for those who can't manage their debts on their own and want to find an alternative to foreclosure, repossession, wage garnishment, or constant stress over mounting financial obligations.

What is bankruptcy?


Bankruptcy is a legal process in which a person or an entity (government, corporation, etc.) declares that they can no longer pay the money that they owe to creditors. The main objective of the bankruptcy laws is to give the debtor a fresh start, by wiping out most of their debts, so that they can start earning an income to pay their remaining debts.

Bankruptcy is a legal proceeding in which a debtor declares bankruptcy and seeks to have some or all of their debts discharged.

Bankruptcy can be initiated by filing for personal bankruptcy or by the assignment for the benefit of creditors, which is less common.

There are four main types of petitionable debt:

  • Unsecured
  • Secured
  • Priority and
  • Dischargeable

Bankruptcy Basics

Bankruptcy Basics provides a snapshot of the bankruptcy process and answers common questions that people have.

This guide is intended to provide basic bankruptcy information to people who plan on filing for bankruptcy, their families, friends, or employer. The information is not meant as legal advice nor should it be relied upon.

In the United States and most other countries, the purpose of filing for Chapter 7 Bankruptcy is to discharge debts and allow for a fresh start. It does not erase any credit records or restrict any rights you may still have in relation to your creditors. In other words, filing for Chapter 7 Bankruptcy does not mean you are no longer responsible for paying your debts. If you want to stop paying your creditors then you would need to file for Chapter 11 or 13 Bankruptcy which get.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is one of the most popular types of bankruptcy in the United States. It is often filed by people who have very little to no assets and not enough income to keep their lifestyle. This chapter can be filed by an individual or a business.

The average credit score for a person filing for Chapter 7 bankruptcy is approximately 675. Most people in this situation file for Chapter 13, which allows them to pay back creditors over time with interest and also provide repayment plans if they are able to afford it.

Credit scores are determined through your credit report, which includes your history with creditors over the past seven years. The factors that determine your credit score include: identity theft, accuracy of information on your credit report, length of time you have had credit accounts open, number of inquiries made on your.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a form of personal bankruptcy that many people have filed in the United States.

In this chapter, it is explained how to file for Chapter 13 bankruptcy and what the benefits of doing so are. It also discusses some of the major problems that individuals and businesses should avoid during this process.

Chapter 13 bankruptcy is meant to give people an opportunity to save their homes from foreclosure, pay back a portion of their debts, and start over again with a clean slate.

Bankruptcy Terms to Know

Credit score is the key metric to measure the creditworthiness of a person. The four-digit credit score ranges from 300 to 850. Individuals with higher scores have a better chance of being approved for credit while individuals with lower scores are more likely to be denied.

Most people are not aware of the different terms associated with bankruptcy and this article covers some of them: Chapter 7, Chapter 13, liquidation, involuntary bankruptcy, and discharge.

Bankruptcy is a process that many go through in order to rid themselves of debts they cannot afford. In order to make it easier for consumers to understand their rights, there are many terms that need to be understood before filing for bankruptcy protection.

Bankruptcy trustee:

There are many different types of trustees in bankruptcy and they have different responsibilities. If you are a trustee in bankruptcy, it is important to know what your role is and the duties that come with the job.

Bankruptcy trustees take on a number of different roles but one of them is to manage the assets of the estate after a company has gone bankrupt. They work with all types of companies – from small businesses, to manufacturing firms and even large corporations such as General Electric who went bankrupt in recent years.

Credit counseling:

Credit counseling is a process used by financial institutions and credit card companies to help consumers with their debts. Credit counselors can help consumers who are struggling to meet their debt payments, solve problems with billing disputes, or even find a job.

Credit counseling has become increasingly popular in the past few years as a way for people to get out of debts and make their life easier. There are many different benefits that credit counselors provide such as providing more than one option for repayment, offering advice on avoiding bankruptcies, and making it easier for borrowers to pay off debts.

Discharged bankruptcy:

The United States Bankruptcy Code defines "discharged" as being "absolved of the obligation to pay a debt."

Banks often file for bankruptcy when they cannot collect on loans or mortgages.

The discharge allows the debtor to start over with a clean slate and relief from debt collectors who may hound them for years after their bankruptcy.

Although discharged bankruptcies are rare, many people have little interest in filing bankruptcy because it comes with many long-term consequences.

Exempt property:

An exclusive property is one that is not for sale. The laws in most countries are set in order to protect people from becoming victims of such transactions. Exempt properties are properties of a certain type which do not fall under the category of private or public and cannot be bought or sold on the open market. There are several different types of exempt property.

This includes: community resources, natural resources, personal items and family heirlooms.


A lien, which is often also referred to as a debenture, is an interest in property that secures the payment of a debt.

A lien on property is when one party takes possession of assets owned by another. This could be because the owner has fallen behind on payments and can't pay for the asset. In that case, the creditor takes possession of those assets until all payments are made.


Liquidation is the process of selling off a company's assets to repay debt. Companies can choose to liquidate in bankruptcy, or when they have no other option.

Liquidation can be an option for companies when their operations are not profitable and running at a loss. There are many different factors that are taken into account before deciding whether or not a company should go through liquidation.

Reaffirmed account:

A reaffirmed account is an ESPN account that has been suspended, but is willing to continue posting content again.

These accounts are usually given back to the creators because they have already proven themselves and they have shown that they can build a loyal following. If a person has built up enough followers, then they might be able to get their account back on the platform.

Secured debt:

The debt market has been changing to be more digital. Electronic lending has allowed for a significant rise in the quality and quantity of loans, as well as helping to reduce the cost of borrowing.

In order to keep up with this new digital economy, banks are investing heavily in AI, which is providing an edge over their competitors.

Unsecured debt:

Unsecured debt is a form of debt that doesn't require a formal loan agreement or collateral.

The damage that this type of debt causes to the borrower and their family can be devastating. This type of debt is often unsecured because it includes things like credit card, medical bill, and payday loan debts. This can lead to bankruptcy if the debtor fails to make payments on time.

Most borrowers are unaware of the consequences that come with unsecured debts until it's too late. They may not understand how these types of loans work or how much interest they'll have to pay back on top of their original loan amount.

Debt That Can't Be Forgiven

For a debt to be forgivable, it must have been incurred by the debtor without fraud or undue influence.

If you are struggling with debt and looking for an option to wipe clean your slate, getting a secured loan could be the answer. With this type of loan, you don’t need to pay any money upfront and the lender will grant you a certain amount of credit based on your income. The only downside is that you must repay the loan in full.

Consequences of Bankruptcy

Bankruptcy is a state when you cannot pay your debt. It can cause devastating effects, like damage to your credit report and credit score, as well as a huge impact on future employment opportunities.

The consequences of bankruptcy are detrimental and can range from the inability to obtain financing in the future to not being able to purchase a car or even rent an apartment. If you are considering filing for bankruptcy, it is important that you understand how it could affect your future.

Understanding how bankruptcy will affect your credit score and what you might be able to do about it is essential to helping prevent such consequences early in the process

Getting a Credit Card or Loan after Bankruptcy

Credit Score is used by lenders to determine whether or not a person is trustworthy enough to borrow money. It also serves as an indicator of how someone spends their money.

It’s never too late to improve your credit score and get a credit card or loan after bankruptcy. This section talks about how you can improve your credit score as well as what steps you can take to get a loan after bankruptcy.

The first step would be understanding where your current credit score stands and what it takes to improve it. The second step would be getting the appropriate documents in order and submitting them for approval. Finally, you need to maintain good behaviors so that your new good credit history will not be canceled out by bad behaviors like late payments or missed payments.

Getting a Mortgage After Bankruptcy

A good credit score can help you get a mortgage without an extensive credit check. So, it is important to keep your score high so that you can access a loan easily and avoid the tedious process of getting approved for a mortgage.

A good credit score is also important when you want to improve your credit rating. Here are some ways that you can use to improve your credit score:

- Make payments on time and in full each month by setting up automatic payments from your bank account. This will help build up your positive history with the bank and increase your chance of being approved for loans in the future.

- Get a secured card with a low interest rate and pay the balance off each month before it expires to keep from accruing any more debt.

- Complete FICO Score Builder

Bankruptcy Alternatives

Credit scores, also called credit reports, are used to determine borrowing capacity. They are determined by a person's credit history. One of the ways to improve your credit score is by disputing errors on your credit report.

Bankruptcy alternatives should be considered instead of filing for bankruptcy when one cannot afford all the loan repayments. There are programs available such as debt settlement and debt negotiation services which can help you reduce your debts by up to 30%.

A Last Word About Debt Relief

A lot of debt relief companies are out there and as with any business, you need to be careful. One way that you can avoid getting scammed is by researching the company before signing up. Make sure that they have a good track record with no scams or complaints filed against them because these are things to look for when researching debt relief companies.

A last word about credit score: One of the most common mistakes that people make when it comes to their credit scores is not checking them on a regular basis. This can cause negative consequences if someone is not able to pay back what they owe in time because they don't know how low their score has fallen.