The main purpose of bankruptcy laws is to give people hopelessly overburdened with debt a financial fresh start. Bankruptcy filings are public records. However, under normal circumstances, no one will know about the bankruptcy. Credit Bureaus will maintain a record of the bankruptcy and it will remain on the credit record for 10 years.
The most common reasons for bankruptcy filings are unemployment, large medical expenses; seriously overextended credit; marital problems, and other large unexpected expenses.
There are two ways a debtor can go bankrupt. The first and most common way is for an individual to file a voluntary petition asking the Court to allow bankruptcy. The second, and rarely used way, is for creditors to ask the Court to make an Order that a person is bankrupt. In this way, a creditor can gain payment, at least in part, for debts a debtor is refusing to pay. In both these cases a Bankruptcy Trustee is required to administer the bankruptcy.
