Bankruptcy is a legal way to help people solve their bill problems. It’s designed for people and businesses who can’t pay their debts and need help.
Bankruptcy laws have been around since Biblical times; for a more detailed discussion, see the article "Bankruptcy and the Bible." And though the rules have changed over the past few thousand years (for example, we don’t put people in jail when they can’t pay their bills) the goal is the same — to level the playing field between people who owe money and the people to whom that money is owed.
When a person is discharged in bankruptcy, they no longer can be held personally responsible for most pre-bankruptcy debts.
There are two main types of consumer bankruptcy: Chapter 7 and Chapter 13. (The other two chapters, Chapter 11 and Chapter 12, apply to corporations and people who don't qualify for a Chapter 13, and to family farmers.)
For more information about Chapter 7 and Chapter 13, please take a few minutes to read through the rest of this site.
