bankruptcy is the legal state of an individual or corporation that has become insolvent or, in another words, unable to repay outstanding debts. while there are many types of bankruptcy filings such as chapter eleven reorganization, purpose of this process is to determine an organized and equitable settlement of debt obligations. bankruptcy proceedings can begin in one of two ways. first, a petition is filed by the borrower, which is the most common method, or second, a petition is filed on behalf of the creditors. it essentially offers individuals and businesses a chance to hit a reset button by forgiving debts that are unable to repay while also offering creditors some form of repayment. for example, mike is a wrestling promoter. his company has been operating in the red for few years. he recognizes that he is unable to pay his bills and decides to file for chapter 13 bankruptcy, a form of debt consolidation. all of the assets of mike's wrestling promotion are weighed and evaluated by the coat and then used to repay a portion of his outstanding debt. mike's creditors agree to restructure his payment plan allowing him to pay them a smaller amount each month over a five year period. this prevents mike from experiencing for closure until the five year term has expired. a record of the bankruptcy filing could stay on mike's credit report for up to ten years, however, which could scare off future lenders. because of it's negative impact on credit access, declaring bankruptcy should always be considered a last resort.
- scare off・・・～を遠ざける