Bankruptcy is when a court declares that a debt no longer exists or is consolidated.
Chapter 12 to reorganize a family farmer Chapter 9 to reorganize a municipality Chapter 13 to reorganize an individual's debts Chapter 7 to wipe out debts. Most bankruptcy cases are filed under Chapter 7. In the past, filing bankruptcy carried a large stigma. Nowadays, over a million people and companies file each year. After major revisions in the law in 1978 and 1994, filing bankruptcy has become a streamlined, straightforward procedure where people almost always keep everything they own.