Bankruptcy Reform Act of 1978

The Bankruptcy Reform Act of 1978 overhauled the U.S. bankruptcy system to provide more straightforward processes for individuals and businesses seeking debt relief. It established two main types of bankruptcy for individuals: Chapter 7, which allows for the liquidation of assets to repay creditors, and Chapter 13, which enables debtors to create a repayment plan while retaining their assets. The act aimed to balance the interests of debtors and creditors, streamline bankruptcy procedures, and reduce stigma around seeking financial relief, making it easier for people to rebuild their financial lives after overwhelming debt.