What is the purpose of bankruptcy?

The purpose of bankruptcy is primarily to provide a legal framework for individuals and businesses to address unmanageable financial situations. When a debtor finds themselves unable to meet their financial obligations, bankruptcy serves as a means to either eliminate certain debts or create a feasible plan for repayment, depending on the chapter of bankruptcy filed. This process enables them to get a fresh start financially, while also ensuring that creditors receive some form of payment.

Choosing this option reflects an understanding of bankruptcy as a tool designed to help individuals regain control over their finances in a structured manner. It acknowledges the reality many face with overwhelming debt and the necessity for a legal process to assist in navigating these challenges. The other options, while related to aspects of bankruptcy, do not fully encapsulate its primary function in aiding individuals dealing with severe financial distress.