What is the purpose of bankruptcy law?

The purpose of bankruptcy law is to provide a way for people or businesses in Massachusetts to get out from under overwhelming debts. Bankruptcy law is designed to help debtors make a fresh start economically. It does this by providing a legal process through which debtors can discharge their debts or obtain a court-approved debt repayment plan. Bankruptcy laws are governed by the federal Bankruptcy Code, which is enforced in all 50 states, including Massachusetts. This code sets out the different types of bankruptcies, how they can be filed, and what can be discharged from a debtor’s debts. The most common type of bankruptcy is known as Chapter 7, which is a liquidation bankruptcy, meaning that the debtor gives up all non-exempt assets to a court-appointed trustee who then sells them to pay creditors. There are also reorganization bankruptcies (Chapter 11 and Chapter 13) that allow the debtor to restructure their debts and keep certain assets. In addition to providing debt relief, bankruptcy laws also protect debtors from collection efforts by creditors. Bankruptcy laws provide debtors with protection from creditor harassment and allow them to restructure their debts and make a fresh financial start.

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What is the purpose of bankruptcy law?

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