Bankrupcy is an unfortunate circumstance that can befall anyone. Bankruptsy can happen to the brash young entrepreneur or the most established businessman. When a business is in serious financial difficulty and is unable to service its debt or pay its creditors, either the compnay or its creditors can file with a federal bankruptcy court for protection under either chapter 7 or chapter 11. Once bankrupcy is filed, the responsibility for repaying debt is temporarily suspended. What is called an automatic stay goes into effect and creditors who are listed on the petition are prohibited from contacting the debtor while he is under bankruptcy protection.