Bankruptcy is a proceeding in a federal court to relieve certain debt of a person or a business unable to pay its debts. A bankruptcy will stay on your credit rating for 7 to 10 years acting like a warning to potential lenders. The assets of a person filing bankruptcy are then turned over to a trustee and used to payoff outstanding bills. Personal bankruptcy can provide relief to people on dire financial straits by releasing them from the obligation to repay their debts.

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