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Introduction to Bankruptcy

Introduction to Bankruptcy

Bankruptcy is the legal procedure by which a debtor’s previous debts are either discharged or restructured, and the debtor is provided with enough assets to live on so that he or she can have a fresh financial restart. When debts are discharged, the bankruptcy court prohibits creditors from taking any form of collection action on such debts. The debtor is no longer legally required to pay on discharged debts. When debts are restructured, a repayment plan is proposed under which a debtor can make installment payments to creditors over a three to five year period. Below is a brief description of the different types of bankruptcy chapters available.