Keeping Bankruptcy law simple and straightforward means dealing with this matter in the easiest way possible, and although it is hardly a fun subject it can be simplified.
Bankruptcy is in fact a legal declaration that a debtor; organization or individual, cannot pay their creditors the money owed to them.
Bankruptcy, in short, is a declaration made valid by law that an organization or individual is not able to pay their creditors what they owe.
It is a provision for resolving outstanding debt, and what happens is the assets of the debtor are taken, sold and divided to pay off creditors as much as possible.
Therefore it stands to reason that in order to declare bankruptcy the debtor actually has to have some assets, and it is the courts who determine this.
Even bearing this in mind is it rare that creditors are paid in full.
There are very few instances wherein this law has been invoked, that the debtor is allowed to remain in business.
All the revenue generated from the division of assets is used to resolve the outstanding debts due.
This discharges the debtor of their obligation even when creditors are not paid in full.
A special court deals with these matters and this is the US Bankruptcy Courts in the Unites States.
It has been set up under the district court system and promulgated through an act of Congress.
Bankruptcy laws come from the Supreme Court and a trustee is elicited to finalize matters.
There are 90 bankruptcy court districts in the US with most states having more than one district.
It is a US judge who makes a decision for discharging the debt and it is a very serious matter.
In most cases the majority of the case is administrative and is handled out of the court by the trustee.
They handle every case on an individual basis and in accordance to the relevant bankruptcy chapters.
These relevant chapters are 7, 12 and 13, and in some cases even chapter 11 will be invoked.
This all depends on the individual case at hand, and what kind of dissolution of debt is demanded of it.