When does an individual typically declare bankruptcy?

An individual typically declares bankruptcy when they can no longer make required payments on their debts. This situation arises when an individual’s financial obligations exceed their ability to pay, leading to a scenario in which continuing to meet those obligations is unfeasible. Declaring bankruptcy serves as a legal process that provides a structured way for the individual to address their debts, often resulting in a discharge of certain obligations, thereby giving them a fresh start financially.

Individuals do not opt for bankruptcy when they can manage their debts, as the definition of bankruptcy encompasses a lack of capability to maintain timely payments. Additionally, the declaration is not a strategy to avoid liquidation for those who are still solvent; rather, it is typically a last resort for those facing insurmountable financial distress. Similarly, having sufficient personal assets would generally suggest an ability to pay debts, thereby making bankruptcy unnecessary in such cases. Thus, the scenario of being unable to make required payments is the correct context for declaring bankruptcy.