How does business bankruptcy work?

[AmateurBusinessman]

In the media business bankruptcy looks like this magical thing that can be filed to wash away a businesses debts without putting the business owner at any personal risk, but is it truly that? Can a business owner borrow money to open a business, have it tank, and then file business bankruptcy after not paying back any loan payments, and just borrow the same amount --or more-- of money the next year and start up again? If the same mentioned scenario happened again, could they just rinse and repeat every year for the rest of their lives? Filing different bankruptcies each time? How does the process work? When can one use it? How can it be used? How should it the used? Have you ever used it before? If so, how did it work? Why did you file it? Know anyone who's filed it? If so, how did it work for them? Why did they file it?

[vangogh]

Bankruptcy isn't a magic solution to failing in business and if you file for bankruptcy good luck getting a loan the following the year. Bankruptcy doesn't just wipe out all your debts. Your assets will be taken to pay back outstanding debt and depending on the type of business entity that could mean coming after your personal assets like your home. Bankruptcy is not a business strategy.

[Paul]

There are different forms of bankruptcy both for business and personal. Either is a last resort and as Vangogh said certainly not an ongoing strategy. In fact I think the purposeful continued misuse of bankruptcy laws can be criminal if to defraud.

[Fulcrum]

The troll returns. That or he's doing some research projects without being upfront with us.

As to the questions:
This happens more often than most of us would think, but less often than maybe the OP suggests without actually saying so.

There are stories where a successful company is bought out, the new owners leverage the company as highly as possible, stop paying vendors, move the money offshore, and effectively bankrupt the company through their personal greed. In fact, I do believe that there is an online machine "dealer" that has recently done something like this - taken customer's deposit/purchase money, filed bankruptcy, and reopened under a new name a week later (Nevada registration with a registered agent listed as the main contact).

The problem, unless you have deep pockets and/or happens across state lines, is that most law enforcement agencies appear to view this as a civil matter rather than the criminal matter that it actually is.

[turboguy]

If they are able to determine that was your intent not only would you have to pay the money back you would spent some time as the game guest of the state or federal government. They would consider that to be fraud.

[billbenson]

I filed personal bankruptcy in 2001. I lost my job and career. Bankruptcy was my only option. I retrained myself but credit bureaus never took it out of their records. I was able to get rid of my credit card debt but I think that is difficult to do today.