Bankruptcy is a federal legal process designed to helpindividuals, spouses, and companies get a financial fresh start by discarding or making arrangements to repay unmanageable debt. It can also be a way for companies to end business and liquidate assets in an orderly way.

The desired outcome of mostbankruptcy cases filed by individuals is a discharge. A discharge is an order from the bankruptcy court permanently prohibiting any creditor from attempting to collect a debt against you. It's also known as a bankruptcy injunction.

Although the discharge is permanent, it is not all-inclusive. Some debts are not dischargeable.For example, most tax debts, child support, and spousal support cannot be discharged.

As the bankruptcy discharge is a very powerful remedy, it is only given to honest debtors that disclose all of their property and debts.

The bankruptcy courts are subunits of the federal district court system. As a result, there is a bankruptcy court in each federal district of the United States. However, depending upon the population of a district, there may be multiple courthouses in different cities. Bankruptcy courts are supervised by bankruptcy judges that are appointed to 14-year terms by federal judicial committees.

There are six type of bankruptcy, known as chapters:

Bankruptcy can have long-term financial and legal consequences. If you're thinking about filing for bankruptcy, then it's wise to consult a lawyer who specializes in this area. If you can't afford a lawyer then check with the American Bar Association to find out if you qualify for free legal help.

In the vast majority of bankruptcy cases, atrustee is automatically appointed when the case is filed. The trustee administers the bankruptcy case by reviewing the documentation of the debtor.

In a Chapter 7 case, the trustee will attempt to sell any non-exempt property to pay creditors. The trustee also has the obligation to be vigilant for fraudulent conduct and failure of the debtor to disclose information. They owe a fiduciary duty to the creditors of a debtor and must collect as many assets as possible to pay creditors.

As bankruptcy is a federal system codified by Congress into the United States Bankruptcy Code, bankruptcy fraud falls under the domain of the federal government. Specifically, bankruptcy fraud, which includes false oaths, failure to disclose debts or assets, and other fraudulent conduct, is a federal crime. Committing bankruptcy fraud can lead to you losing your discharge and could very well land you in jail.

Although the federal government keeps a watchful eye out for bankruptcy fraud, any creditor of a bankruptcy debtor can file a complaint against the debtor. The complaint may seek to deny the debtor a discharge for bankruptcy fraud. In addition, the complaint may seek a judgment by the bankruptcy court that the debt owed to the creditor is non-dischargeable in bankruptcy. A debt may be non-dischargeable under the bankruptcy laws or because the credit was obtained by fraudulent means. Bankruptcy is certainly not a safe haven for the unscrupulous debtor.

Link:

What Is Bankruptcy? - The Balance