Bankruptcy Basics Federal courts, in their exclusive jurisdiction over bankruptcy cases, give people and businesses a fresh start when they can no longer pay their debts. There are several chapters of bankruptcy under the United States Bankruptcy Code, but the most common ones for individuals and businesses are: Chapter 7: Involves liquidation, where non-exempt assets are sold to pay off creditors. Individuals or businesses with significant unsecured debts may opt for Chapter 7. Chapter 11: Primarily for businesses, it allows for reorganization and continuation of operations while developing a plan to repay creditors. It’s more complex and costly, often used by...
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