A legal proceeding (commonly known as “Chapter 11”) in which insolvent individuals or businesses are adjudged incapable of repaying debts, and their remaining assets are allocated for equitable distribution to creditors or reorganized for continued operation.

Debtors are freed from most liabilities. The opportunity for a fresh start harmonizes with the American sense of fairness and compassion for those who have unwittingly fallen on hard times. Since the Constitution grants exclusive bankruptcy jurisdiction to Congress, it is subject to continuous, national political scrutiny from competing interest groups seeking, for example, to preserve protection for spendthrift consumers while limiting misuse by businesses and the wealthy At the end of the century bankruptcy proceedings are less socially stigmatized than ever before for both individuals and corporations who have encumbered debts within constant affluence and seeming opportunities of economic growth.