Bankruptcy Act of 1978

The Bankruptcy Act of 1978 is a law that governs how individuals and businesses can manage or eliminate debts they cannot pay. It establishes procedures for filing bankruptcy, protects honest debtors from unfair treatment, and provides creditors a legal process to recover debts. The law allows financially distressed parties to either reorganize their debts to continue operations (Chapter 11) or Liquidate assets to pay creditors (Chapter 7). Overall, it aims to balance fair treatment of debtors and creditors while promoting economic stability and offering a fresh start for those in financial difficulty.