Bankruptcy

Bankruptcy is a legal process through which individuals or businesses that are unable to repay their debts seek relief from some or all of their liabilities. It is typically initiated through a court filing and can lead to the liquidation of assets or a reorganization of debts. Bankruptcy can significantly impact credit scores and financial stability. 

Understanding a borrower’s bankruptcy history is crucial for a lender, as it may affect the borrower’s ability to secure new loans and meet repayment obligations.