The first step is understanding what bankruptcy is and how it will affect your life.
The Legal Definition
Bankruptcy is a legally declared inability of an individual (you) to pay their creditors (the people you owe money to). Creditors may file a bankruptcy petition against a debtor (you) in an effort to recoup a portion of what they are owed. In the majority of cases, however, bankruptcy is initiated by the debtor.
The primary purpose is: (1) to give an honest debtor a "fresh start" in life by relieving the debtor of most debts, and (2) to repay creditors in an orderly manner to the extent that the debtor has the means available for payment.
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