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Bankruptcy is a legal proceeding initiated when a person or business cannot repay outstanding debts or obligations. 

The bankruptcy process begins with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common.  The debtor's assets are measured and evaluated, and the assets may be used to repay a portion of the outstanding debt. 

• Bankruptcy is a legal proceeding to allow individuals or businesses freedom from their debts while simultaneously providing creditors an opportunity for repayment.
• Bankruptcy is handled in federal courts, and rules are outlined in the U.S. Bankruptcy Code.
• There are various types of bankruptcy, commonly referred to by their chapter within the U.S. Bankruptcy Code.
• For instance, Chapter 11 bankruptcy allows businesses to  reorganize and reemerge, while Chapter 7 relates to individual bankruptcy.
• Bankruptcy can allow you a fresh start, but it will stay on your  credit reports for several years and make it difficult to borrow in the future.

What Are the Types of Bankruptcy Filings? 

Individuals—and in some cases businesses, with few or no assets—typically file for  Chapter 7 bankruptcy.  It allows them to dispose of their unsecured  debts, such as credit card balances and medical bills.  Those with  nonexempt assets, such as family heirlooms (collections with high valuations, such as a coin or stamp collections); second homes; and cash,  stocks, or bonds, must liquidate the property to repay some or all of their unsecured debts. 

A person filing Chapter 7 bankruptcy is basically selling off their assets to clear their debt.  People who have no valuable assets and only exempt property—such as household goods, clothing, tools for their trades, and a  personal vehicle worth up to a certain value—may end up repaying no part of their unsecured debt.3 

Businesses often file for Chapter 11 bankruptcy, the goal of which is to reorganize, remain in business, and once again become profitable.   Filing Chapter 11 bankruptcy allows a company to create plans for profitability, cut costs, and find new ways to increase revenue.  Their preferred stockholders, if any, may still receive payments, though common stockholders will not.4 

For example, a housekeeping business filing Chapter 11 bankruptcy might increase its rates slightly and offer more services to become continueprofitably profitable.  Chapter 11 bankruptcy allows the business tocontinue conducting its business activities without interruption while working on a debt repayment plan under the court's supervision. In rare cases,  individuals can also file for  Chapter 11 bankruptcy. 

Individuals who make too much money to qualify for Chapter 7 bankruptcy may file under Chapter 13,  also known as a wage earner's plan.  It allows individuals—as well as businesses with consistent income—to create workable debt repayment plans.  The repayment plans are commonly in installments over the course of a three- to five-year period.  In  exchange for repaying their creditors, the courts allow these debtors to keep all their property,  including otherwise nonexempt property.

how long they’ve been at it, and what got them to where they are.