It is a legal proceeding that results in "wiping the slate clean and starting anew"; most of the debtor's obligations are eliminated in an attempt to put the debtor's financial affairs in order. What is it?
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A. B. C. D.B
The correct answer to this question is A. Personal bankruptcy.
Personal bankruptcy is a legal proceeding in which an individual who is unable to pay off their debts can seek relief from their creditors by having most of their obligations eliminated or discharged. The primary goal of personal bankruptcy is to give debtors a fresh start by allowing them to discharge their debts and start anew.
There are two types of personal bankruptcy, Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 bankruptcy, also known as straight bankruptcy, is a liquidation process where the debtor's non-exempt assets are sold to pay off as much of their debts as possible. The remaining debts are then discharged, and the debtor is no longer responsible for them. Chapter 13 bankruptcy, on the other hand, is a reorganization process where the debtor creates a plan to repay their debts over a period of three to five years. At the end of the repayment period, the remaining debts are discharged.
Personal bankruptcy is not always the best solution for every individual who is struggling with debt. It can have significant long-term consequences on an individual's credit score and financial standing. Therefore, it is important for individuals to carefully consider their options and seek the advice of a qualified financial professional or bankruptcy attorney before filing for bankruptcy.