what is bankruptcy, how does it work, how does it affect your credit, and what does it do?
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Bankruptcy is a situation where you are unable to pay back what you owe (without subjecting you to inhumane treatment*, of course), so to solve this problem you register with a government office, and they take an inventory of the assets you owe, sell off some of them (to pay off some of the debt), let you keep what they deem as essential, and free you from responsibility of the rest of the eligible debt. Your credit obviously goes to the shitter, because you’ve proven to be an unreliable person whom creditors shouldn’t give loans to in the future, but over a long time it can be repaired.
*Because you could argue that technically you can enslave this person and force them to work to pay off their debt since they still have their body, but this is unethical, so… this used to be the case in the old days but we don’t do it like that anymore
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