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Overview of Bankruptcy
Bankruptcy is a federal body of law concerning the relationship between a debtor and creditors. Specifically, bankruptcy law provides several methods for a debtor to recover from financial situations that are overwhelming to the individual’s continued well-being or existence. The bankruptcy process differs for individuals and businesses. This chapter introduces the bankruptcy system. It introduces the applicable bankruptcy laws and key provisions. It begins by explaining the types of bankruptcy — Chapters 7, 11, and 13. It then explains the method for initiating and processing a bankruptcy filing. It explores the role of the debtor, creditors, bankruptcy court, and trustee and the rights of each during the bankruptcy process. This includes the trustee or debtor in possession’s right to stop collection efforts; the right to dis-affirm contracts; the right to recover certain prior payments made to creditors, etc. A key concept throughout the bankruptcy process is the priority of secured and unsecured creditors. Lastly, it explains the rights and obligations of the parties at the conclusion of the bankruptcy process.