In bankruptcy proceedings, what is the main purpose?

The main purpose of bankruptcy proceedings is to relieve debts for individuals or businesses. This process is designed to provide debtors with a fresh start by eliminating or restructuring their debts, allowing them to regain financial stability. Bankruptcy serves as a legal mechanism that protects debtors from creditors while they navigate their financial difficulties, either by liquidating assets to pay off debts or by creating a repayment plan that allows them to gradually pay off what they owe over time.

The focus on debt relief distinguishes bankruptcy from other financial processes like selling assets, providing loans, or negotiating contracts, which do not primarily aim to alleviate the financial burdens that led to the bankruptcy filing. Instead, bankruptcy is fundamentally about providing a solution to overwhelming debt, ensuring that individuals and businesses can move forward without the weight of unsustainable financial obligations.