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Debt-receivable problems are classic problems in economic activities that if not resolved properly can result in legal uncertainty and losses to the parties involved. One of the legal instruments provided in the Indonesian legal system to resolve these disputes is through the bankruptcy mechanism. This study aims to review the legal provisions regarding bankruptcy as regulated in Law Number 37 of 2004 and evaluate the effectiveness of its implementation as a solution to resolving debt-receivable problems. The method used in this study is the normative legal approach, by reviewing statutory provisions, legal doctrine, and court decisions. The results of the study indicate that although normatively the bankruptcy mechanism has a clear legal structure, its implementation in the field still faces obstacles in terms of process efficiency, protection of creditor and debtor rights, and supervision of curators. Therefore, policy updates and optimization of the function of judicial institutions are needed to increase public trust in this mechanism.

A valid agreement creates a contract that gives rise to rights and obligations between the parties, and if one party does not fulfill its obligations, it can be declared to be in default. Default can be interpreted as the failure to fulfill or negligent in carrying out obligations as stipulated in the agreement made by the creditor and debtor. One example of a case of default regarding debts involving the Deputy Regent of Sidoarjo, Subandi, who borrowed IDR 1 billion from Darmiati Tansilong. The Supreme Court rejected Subandi's appeal (Decision No. 1609/K/Pdt/2022) and stated that he was in default. The Supreme Court's decision emphasized that the default committed by Subandi poses a risk in the form of debt repayment, paying profit sharing for property business development and the total interest that has been promised.