Bankruptcy makes sense for people and businesses who have significantly more debt than money and who don’t anticipate the situation changing in the near future.
Additionally, sometimes people will file for bankruptcy when they need to restructure the terms of their debt, like repaying mortgage arrears or taxes in a structured repayment plan.
In the U.S., more people (or non-businesses) file for bankruptcy than businesses. In 2021, 399,269 non-businesses filed for bankruptcy compared to 14,347 businesses.
Is a bankruptcy petition guaranteed to be approved?
Filing a petition for bankruptcy protection does not guarantee that it will be approved. There are many procedural steps that, if missed, may disqualify a filer from proceeding with the bankruptcy. There are also reviews, tests, and regulations that may impede an entity from either filing for bankruptcy altogether or may limit the type of bankruptcy filed.