Do you know anyone who has claimed bankruptcy?

Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors.

The primary purpose of bankruptcy 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.

Bankruptcy allows debtors to resolve debts through the division of non-exempt assets among creditors. Additionally the declaration of bankruptcy allows debtors to be discharged of most of the financial obligations, after their non-exempt assets are distributed, even if their debts have not been paid in full. During the pendency of a bankruptcy proceeding, the debtor is protected from extra-bankruptcy action by creditors by a legally imposed stay. Creditors cannot pursue lawsuits, garnish wages, or attempt to compel payment.