10 Pieces of Bankruptcy Information Everyone Should Know

Being bankrupt doesn't have to mean you have absolutely no money. Voyagerix/iStock/Thinkstock

Each day in America, around 2,500 individuals and businesses file for bankruptcy [source: ACA International]. The ranks of the financially belly-up include former professional athletes, glitzy Atlantic City casinos and lots of regular folks who are simply drowning in debt. By the second quarter of 2014, American households carried $669 billion in high-interest credit card debt and $8.09 trillion in mortgage debt [source: New York Fed].

Nobody wants to go bankrupt. Nobody plans to be up to their ears in debt. But when the forces of evil converge — high unemployment, stagnant housing markets, aggressive debt collectors — bankruptcy is often the only defense against complete financial ruin.

Even if you are in a good place financially, it's important for everyone to understand exactly what bankruptcy means and how it can be both a curse and a lifeline. Is bankruptcy the same thing as going broke? What's the deal with all of the different "chapters" of bankruptcy? And what, if any, are the alternatives for folks in serious financial straits?

Keep reading for our 10 facts about bankruptcy that absolutely everyone should know.