Bankruptcy
From Debt Free Dude
Bankruptcy is a legal status that can be obtained when an entity is unable to fulfill its obligations to creditor. There are different forms of bankruptcy. Bankruptcy is designed to either make sure that each creditor gets their fair share of the remaining assets while providing a structure that will allow the entity to regain its financial footing if possible.
If an entity is unable to regain solvency, its assets will be divided among the creditors.
[edit] Retirement Funds During Bankruptcy
Most types of retirement accounts are protected during a bankruptcy. This can be a type of asset protection. Creditors can't take away the money you've put toward retirement.
[edit] Internal Revenue Service
Money owed to the IRS is not canceled as part of a bankruptcy. The government still gets their money.
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