What Is Bankruptcy?

When a debtor files bankruptcy in a Federal Bankruptcy Court the federal and state debt collection procedures that are otherwise available to creditors are replaced by a powerful and wide-ranging system of federal laws and procedures. Bankruptcy takes different forms and is flexible enough to accomplish different goals. Two of the distinctive characteristics that make bankruptcy so different from collection remedies under state law are: (1) Bankruptcy encompasses all of the debtor’s assets and debts; and (2) Bankruptcy is designed to afford relief to the debtor by resolving and settling current debts, while at the same time protecting creditors and guarding their interests.

For more articles on Bankruptcy see: Bankruptcy: Automatic Stay,