Bankruptcy is a legal process that helps individuals or businesses who cannot pay their debts. It allows them to either eliminate some debts or create a plan to repay them over time. The process is designed to give a fresh start to those in financial trouble while ensuring fair treatment for creditors. There are different types of bankruptcy, such as Chapter 7 and Chapter 13 in the United States. Chapter 7 involves liquidating assets to pay off debts, while Chapter 13 allows for a repayment plan over several years. Bankruptcy can have long-term effects on credit scores and financial opportunities.