Bankruptcy is a federal court process created to help individuals and businesses deal with their debt, either through A sale of a debtor’s property with the proceeds to be used for the benefit of creditors. or reorganization, under the protection of the The bankruptcy judges in regular active service in each district; a unit of the district court.. While there are many chapters in the The informal name for title 11 of the United States Code (11 U.S.C. §§ 101-1330), the federal bankruptcy law. Click for more: Bankruptcy Introduction Video, the most common bankruptcy sections for individuals are Chapters 7 and 13.