A legal proceeding regarding an individual or small business which is struggle to pay back unpaid debts. The bankruptcy process begins with a petition filed by the debtor (most common) or on behalf of lenders (less common). All of the debtor's property are measured and evaluated, whereupon the assets are used to pay back some of outstanding debt. Upon the successful completion of bankruptcy proceedings, the debtor is relieved of the debt obligations incurred before filing for bankruptcy.  

Bankruptcy laws assist people to who can no more pay their creditors get a fresh start - by liquidating assets to pay their debts or by making a repayment plan. Bankruptcy laws also safeguard struggling firms and provide for orderly distributions to business creditors by way of reorganization or liquidation. Theoretically, the ability to file for bankruptcy may benefit an overall economy by giving persons and companies one more chance and providing creditors with a measure of debt repayment.   

Bankruptcy filings in the United States can fall under one of many chapters of the Bankruptcy Code, such as Chapter 7 (which involves liquidation of property), Chapter 11 (company or personal "reorganizations") and Chapter 13 (debt repayment with lowered debt covenants or payment plans). Bankruptcy filing specifications vary widely between various nations, resulting in higher and lower filing rates based on how easily an individual or business can complete the process.  

Bankruptcy in the United States is a matter placed under Federal jurisdiction by the United States Constitution (in Article 1, Section 8, Clause 4), which allows Congress to enact "uniform laws on the subject of bankruptcies throughout the United States". The Congress has enacted statutes governing bankruptcy, mainly in the form of the Bankruptcy Code, located at Title 11 of the United States Code. Federal law is amplified by state law in some places where Federal law fails to speak or expressly defers to state law.

While bankruptcy cases are usually filed in United States Bankruptcy Court (an adjunct to the U.S. District Courts), bankruptcy cases, particularly based on the validity of claims and exemptions, are usually based upon State law. State law therefore performs a major part in several bankruptcy cases, and it is usually not possible to generalise [http://www.chillicious.com/finance/selecting-the-right-bankruptcy-attorney/ bankruptcy] law throughout state lines.

Commonly, a debtor declares bankruptcy to get relief from debt, and this is accomplished either through a discharge of the debt or even through a restructuring of the debt. Usually, whenever a debtor files a voluntary petition, his or her [http://www.chillicious.com/finance/understanding-credit-card-bankruptcy/ bankruptcy] case commences.

The goal of bankruptcy is two-fold:  

(2) to pay creditors in an orderly fashion. [http://www.chillicious.com/debt-consolidation/what-you-should-know-about-bankruptcy/ Bankruptcy] is governed by federal law which usually trumps state law when it comes to the actions of both the debtor and creditors.