The primary purpose of bankruptcy is: (1) to give an honest debtor a "fresh start" in life by relieving the debtor of most debts, and (2) to repay creditors in an orderly manner to the extent that the debtor has the means available for payment. Bankruptcy allows debtors to be discharged from the legal obligation to pay most debts by submitting their non-exempt assets, if any, to the jurisdiction of the bankruptcy court for eventual distribution among their creditors. A bankruptcy case is initiated by the filing of a petition, which contains the Debtor's financial information. A married couple may file a joint petition. Though in a technical sense the filing of a joint petition initiates two separate bankruptcy cases (and estates), the cases and estates are usually consolidated and treated as one.

There are two common forms of bankruptcy: liquidation and reorganization. In the United States the law provides for one liquidation chapter (chapter 7); all other chapters are for reorganization (chapter 9- municipalities, chapter 11- businesses or individuals, chapter 12- family farmers, chapter 13- individual "wage earners".) Upon the filing of the bankruptcy petition, the Debtor's assets constitute the bankruptcy "estate". With the notable exception of a case under chapter 11, a Trustee is appointed to oversee the Debtor's estate, to evaluate claims and perform other functions. In certain instances a Trustee can be appointed to a chapter 11 case.

In a liquidation bankruptcy, the Debtor's nonexempt (ie, legally unprotected) assets are sold off to satisfy creditor claims. This is referred to as "administering" the Debtor's estate. The Creditors with timely filed and valid claims participate in a pro rata distribution of the proceeds obtained through the liquidation. The distribution is based on a system of priorities, in which certain classes of claimants are given priority over others. A liquidation case in which no liquidation occurs, and thus no assets are adminis