Bankruptcy is a legally declared inability or impairment of ability to pay creditors. Bankruptcy can be requested by creditors in an effort to recoup a portion of what they are owed; however, in the majority of cases, the bankruptcy is initiated by the bankrupt individual.
Bankruptcy allows debtors to resolve debts through the dividing of non-exempt assets among creditors.
The declaration of bankruptcy allows debtors to be discharged of most of the financial obligations even if their debts have not been paid in full. The creditor will not be permitted to continue lawsuits, garnish wages, or contact the debtor by phone to demand payment.