A judge and court trustee assess the assets and obligations of people, partnerships, and companies declaring bankruptcy when their debts have gotten so out of hand that they are unable to pay them.
The court makes the decision about debt discharge. A “discharge” signifies that the debtors are no longer obligated to make payments. If the court determines that the individual or company has sufficient assets to cover its debts, it may potentially dismiss the case.
Laws governing bankruptcy were created to provide people with a fresh start if their finances fell apart. Lawmakers could realize that a second chance is an essential safety net in a capitalist market, regardless of whether the collapse was the result of poor choices or terrible luck.