Bankruptcy is a process by which individuals or businesses can repay or eliminate some or all of their debt under the supervision of the Federal Bankruptcy Court. There are two major categories of bankruptcy: liquidation and reorganization. In liquidation, the person or company sells (liquidates) property to pay back debt. Some property may be protected (exempt) from liquidation, depending on the situation. On the other hand, reorganization is an attempt to extend the life of a company. It includes the restatement of assets and liabilitiesand a restructuring of the payment system to help the company pay its creditorsmore reliably. There are several types of bankruptcy, denoted by chapters, andeach covers different situations and follows its ownspecific regulations.Here we’ll go into detail about Chapters 7, 11, and 13.