If a debtor is unable to pay the debts, then he can get his debts discharged in parts or full with the help of the Bankruptcy Law.
The ideology behind laws on bankruptcy is not to punish the debtor for his inefficiency to pay the debts instead, to provide him an opportunity to start his life afresh.

The assets of the debtor can be divided amongst the creditors or he can continue his business and pay them their debts.
Either the debtor or his creditors can initiate the bankruptcy proceedings.

The United States Bankruptcy Courts conduct the proceedings of bankruptcy and are dependent on the bankruptcy rules put forth by the Supreme Court.

Chapter 7 bankruptcy that involves liquidation of assets is the most common.
A court-appointed trustee takes charge of debtor’s assets, sells them and distributes the proceeds amongst his creditors.
Debts like child support, alimony and tax debts are not dischargeable.

In Chapter 11 and Chapter 13, the debtor has a chance to reorganize by providing a repayment plan and making the payments to his creditors over the next few years.

Chapter 11 is for businesses while Chapter 13 is for individuals.