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[Music] [Music] what is bankruptcy bankruptcy is the legal process by which federal bankruptcy courts help individuals and businesses eliminate all or part of their outstanding debts and repay a portion of what they owe its good to know that not all bankruptcies are created equal some are more suitable for individuals and others are intended to help businesses and large organizations there are six types of bankruptcy chapters in u.s legislature a chapter is a section of the bankruptcy code where the specific law is found lets take a closer look at each of the six types chapter 7 bankruptcy liquidation also known as straight bankruptcy chapter 7 is the most common type of bankruptcy filed by individuals the process consists of a court appointed trustee who oversees the sale of your assets to pay off the people that you owe money to if theres any remaining unsecured debt it is typically erased however chapter 7 bankruptcy does not cover all types of debt such as taxes and student loan