Bankruptcy law does protect a large portion of individual's properties, with laws varying depending on circumstance and jurisdiction.

Under Chapter 7 bankruptcy, a debtor's assets are largely liquidated, and distributed to their creditors, reliving the debtor of further liability. Chapter 11 bankruptcy deals with reorganization of debt, with the goal of coming out of bankruptcy for continued operation, and repayment of one's liabilities. (see also Corporate Chapter 10 & Individual Chapter 13 protections)

With a bankrupt firm, ownership of assets are transferred first to the firm's bondholders and other creditors, (with secure creditors first in line), and shareholders last-in-line to be paid off.