The main purpose of the laws of bankruptcy are to give an honest debtor a "new start " in life by relieving the debtor of most debts, and to repay those debts in an orderly manner to the extent that the debtor has the money available for payment. Bankruptcy allows debtors to resolve bills through the division of non-exempt assets among those that they owe. Additionally the declaration of bankruptcy allows people with to many bills to be discharged of most of the financial obligations, after their non-exempt assets are given out, even if their debts have not been paid completely. During the the pendency of a bankruptcy proceeding, the "debtor" is protected by the law from extra-bankruptcy action by creditors legaly.
Bankruptcy fraud is a type of crime of filing for bankruptcy with malicious intent, that is with the intention of not paying for goods even though the buyer has money that could be used to pay for them, or accepting payments for goods or services but not actually supplying them. Common types of bankruptcy fraud are petition mills, false oaths, some concealment of assets, and fraudulent conveyance. Multiple filings are not as such fraudulent; as with all things in the law, it depends on the actual situation. Bankruptcy fraud should be distinguished from what is called strategic bankruptcy, which is not a criminal act but may prejudice a judge against the the person if there is evidence that bankruptcy is being used strategically.
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