Option B is the correct answer because filing for bankruptcy absolves a person of repaying some kinds of debt, for example, personal loans or credit card charges.


The definition of a bankruptcy is the official and legal declaration of an inability to pay back any debts, notifying all current loaners of an inevitable loss of profit. This action is permanent, not merely annual, which rules out Answer A. Furthermore, it does not restart an individual’s credit score (Answer C), and no plan is specially created to help a person with loans when they file for bankruptcy (Answer D).

The most famous example of a modern-day economic bankruptcy is the PG&E case. However, some cases can be disputed, such as the hearing of JP Morgan Chase versus old General Motors.

Types of Debt.
Types of Debt (Source: https://www.debtacademy.com)