What does bankruptcy mean?

bankruptcy, the status of a debtor who has been declared by judicial process to be unable to pay his debts. Although sometimes used indiscriminately to mean insolvency, the terms have distinct legal significance. Insolvency, as used in most legal systems, indicates the inability to meet debts.

How does bankruptcy work for a business?

Bankruptcy is a legal tool to help consumers and businesses resolve overwhelming debt. It’s a complicated process that’s best taken on with the assistance of an attorney. Chapter 7 and Chapter 13 are the two most common types of bankruptcy for consumers, while Chapter 11 is typically used for businesses.

How long does bankruptcy take?

The bankruptcy process can take anywhere from a few months to several years. Debtors approved for bankruptcy are typically protected from creditors as long as they meet the terms of the bankruptcy agreement. Bankruptcy is a process that gives you a legal means of starting over financially when you can't afford to pay your debts.

What are the different types of bankruptcy?

The two most common kinds of consumer bankruptcy are Chapter 7 and Chapter 13. Chapter 11 bankruptcy is typically used by businesses. Known as “liquidation” since most unsecured debts are forgiven, Chapter 7 bankruptcy is the fastest and most common form of bankruptcy.