Bankruptcy

[The Raven]

When I was watching TV series "The office" I heard of Michael saying he has to declare Bankruptcy and since then I have no idea what does it mean in USA. Is his debt being wiped off or something? I would like to have somebody explain to me how does that work in USA.

[Shortie]

When someone declares bankruptcy, it is a way for them to be able to clear all their debts in one go if they are struggling to pay for the debts that they have accumulated.

It is not something that one must rely on when it comes to borrowing money and not being able to pay it off but for circumstances such as now with the cost of living and rise of inflation, some people may find that filing for bankruptcy will help them out.