Bankruptcy is the legal status of a person or other entity that can not pay the debt to the creditor. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.
Bankruptcy is not the only legal status that an insolvent person may have, and the term
Video Bankruptcy
Etymology
The word bankruptcy comes from the Italian
Maps Bankruptcy
History
In Ancient Greece, bankruptcy did not exist. If a man is in debt and he can not pay, he and his wife, children or servants are forced to engage in "debt bondage", until creditors recover losses through their physical labor. Many ancient city-states in ancient Greece restricted debt slavery within five years; debt slaves have the protection of life and limbs, which is not enjoyed by ordinary slaves. However, the debtor's servants may be detained beyond that time limit by creditors and are often forced to serve their new master for life, usually in much harsher conditions. The exception to this rule is Athena, which by the law of Solon prohibits slavery for debt; as a result, most of the Athenian slaves were foreigners (Greek or otherwise).
Statute of Bankrupts of 1542 is the first law under British law dealing with bankruptcy or bankruptcy. Bankruptcy is also documented in East Asia. According to al-Maqrizi, Yassa of Genghis Khan contains provisions that mandate the death penalty for anyone who becomes bankrupt three times.
The failure of a country to meet the payment of bonds has been seen on many occasions. Philip II of Spain had to declare the four state bankruptcies in 1557, 1560, 1575 and 1596. According to Kenneth S. Rogoff, "Although the development of international capital markets was very limited before 1800, we still categorize the defaults of France, Portugal, Prussia, Spain , and the early city states of Italy.At the end of Europe, Egypt, Russia, and Turkey also have a history of chronic failures. "
Modern law and debt restructuring
The main focus of modern insolvency laws and the practice of business debt restructuring is no longer dependent on the elimination of bankrupt entities, but on the re-modeling of financial structures and debtor organizations that are experiencing financial difficulties to enable business rehabilitation and sustainability.
For private households, some argue that it is not enough to simply neglect the debt after a certain period of time. It is important to assess the underlying issues and minimize the risk of financial hardship to recur. It has been emphasized that debt advice, supervised rehabilitation periods, financial education and social assistance to seek sources of income and to improve the management of household expenditures should be equally provided during this rehabilitation period (Refiner et al. , 2003 ; Gerhardt, 2009; Frade, 2010). In most EU member states, debt relief is conditioned by a partial payment obligation and by a number of requirements regarding the debtor's behavior. In the United States (US), discharge is conditioned to a lesser extent. Broad spectrum in the EU, with Britain coming closest to the US system (Reifner et al., 2003; Gerhardt, 2009; Frade, 2010). Other Member States do not provide an option for debt relief. Spain, for example, passed a bankruptcy law (lei concurs) in 2003 that provided a debt settlement plan that could result in debt reduction (a maximum of half of that amount) or a five-year extension of payments (Gerhardt, 2009), but does not foresee debit debts.
In the US, it is very difficult to waive federal or federal student loan debt secured by filing for bankruptcy. Unlike most other debts, the student loan may be exhausted only if the person seeking a dismissal sets a specific basis for repatriation under the Brunner test, in which the court evaluates three factors:
Even if a debtor proves these three elements, the court only allows a partial repayment of student loans. Student loan borrowers may benefit from restructuring their payments through Chapter 13's bankruptcy repayment plan, but few qualify for the partial or complete release of their student loan debt.
Fraud
Bankruptcy fraud is a white-collar crime. While it is difficult to generalize across jurisdictions, common criminal acts under bankruptcy laws typically involve concealment of assets, concealment or destruction of documents, conflicts of interest, fraudulent claims, false statements or statements, and costing or re-distribution arrangements. Counterfeiting on bankruptcy forms is often a false oath. Some archiving is not inside and from itself criminal, but they may violate the provisions of bankruptcy law. In the US, the bankruptcy fraud law is primarily focused on the mental state of a particular action. Bankruptcy fraud is a federal crime in the United States.
Bankruptcy fraud should be distinguished from strategic bankruptcy , which is not a criminal act because it creates a real (not fake) bankruptcy state. However, it may still work against the filer.
All assets must be disclosed in the bankruptcy schedule, regardless of whether the debtor is confident that the asset has a net worth. This is because once a bankruptcy petition is filed, it is for the creditor, not the debtor, to decide whether a particular asset has value. The future consequences of removing assets from the schedule can be very serious for offending debtors. In the United States, a closed bankruptcy may be reopened with the motion of a creditor or US guardian if the debtor tries to then declare the ownership of the "scheduled asset" after the release of all debt in bankruptcy. The trustee can then take the asset and liquidate it for the benefit of the creditor (formerly exhausted). Whether the concealment of such assets should also be considered for prosecution because fraud or perjury will be at the discretion of a US judge or Trustee.
By country
ArgentinaIn Argentina, the national law "24,522 de Concursos y Quiebras" regulates bankruptcy and reorganization of individuals and corporations, public entities not included.
Australia
In Australia, bankruptcy is a status applicable to individuals and governed by the federal Bankruptcy Act 1966 . The company does not go bankrupt but goes to liquidation or administration, which is governed by the federal Corporations Act 2001 .
If a person commits an act of bankruptcy, then the creditor may apply to the Federal Circuit Court or the Federal Court for a waiver order. The act of bankruptcy is defined in the law, and includes the failure to comply with bankruptcy notices. A bankruptcy notice can be issued where, among other cases, a person fails to pay the assessment debt. A person may also request that he or she be declared bankrupt by filing a debtor petition with an "Official Receiver", which is the Australian Financial Security Authority (AFSA).
To declare bankruptcy or for creditors to file a petition, the debt should be at least $ 5,000.
All bankrupts must file a Statement of Affairs with AFSA, which includes important information about its assets and liabilities. A bankruptcy can not be canceled until this document has been filed.
Typically, bankruptcy lasts three years from filing a Statement of Relations with AFSA.
Bankruptcy Bankruptcy (in most cases, Official Receivers) is appointed to handle all matters related to bankrupt real estate administration. The Trustee's work includes notifying the creditor of the company and addressing the creditor's questions; ensure that bankruptcy complies with its obligations under the Bankruptcy Act; investigate the bankrupt financial affairs; realizing the funds that are entitled to plantations under the Bankruptcy Law and distributing dividends to creditors if sufficient funds are available.
During their bankruptcy, all bankrupt individuals have certain restrictions. For example, a bankrupt must get permission from his guardian to travel abroad. Failure to do so may result in bankruptcy being terminated at the airport by the Australian Federal Police. In addition, a bankrupt is required to provide his trustee with details of income and assets. If the bankruptcy is not in line with the Trustee's request to provide details of earnings, the trustee may have reason to file an Objection for Discharge, which has the effect of extending bankruptcy over the next five years.
The realization of funds usually comes from two main sources: bankrupt assets and bankrupt pay. There are certain protected assets, known as protected assets . This includes furniture and appliances, trading tools and vehicles up to a certain value. All other value assets are sold. If a house or car is above a certain value, the bankrupt can buy back interest from the property to keep the asset. If the bankrupt does not do this, the interest on the estate and the trustee can take over the asset and sell it.
Bankrupt must pay income contribution if their income is above certain limit. If a bankrupt fails to pay, the trustee may issue a notice to withhold a bankrupt salary. If that is not possible, the Trustee may seek to extend bankruptcy over the next five years.
Bankruptcy can be canceled before the end of a normal three year period if all debts are paid in full. Sometimes bankruptcy may be able to raise enough funds to make Composition Offers to creditors, which will have the effect of paying creditors the amount of money they have. If the lender accepts the offer, the bankruptcy can be canceled once the funds have been received.
After bankruptcy is canceled or bankruptcy has been automatically terminated, the status of a bankrupt credit report is shown as "bankrupt" for several years. The maximum number of years this information may be held is subject to retention limits under the Privacy Act. How long the information on the credit report may be shorter, depends on the issuing company, but the report should stop recording that information based on the criteria in the Privacy Act.
Brazil
In Brazil, the Bankruptcy Act (11.101/05) regulates courts or outside court curators and bankruptcies of courts and applies only to public corporations (excluding financial institutions, credit cooperatives, consortia, additional scheme entities, corporations that manage health care plans , equity firms and some other legal entities. That does not apply to state-run companies.
The current law covers three legal processes. The first is bankruptcy itself ("FalÃÆ'ªncia"). Bankruptcy is a liquidation procedure ordered by a court for a bankrupt business. The ultimate goal of bankruptcy is to liquidate the company's assets and pay its creditors.
The second is the Court-ordered Restructuring ( RecuperaÃÆ'§ÃÆ'§ Judicial ). The aim is to resolve the business crisis situation of the debtor to allow continuation of the producers, employment of workers and the interests of creditors, leading, thus, to preserve the company, corporate functions and develop economic activities. This is a court procedure required by a debtor who has been in business for more than two years and needs approval by a judge.
Extrajudicial Restructuring ( RecuperaÃÆ'§ÃÆ' £ Extrajudicial ) is a private negotiation involving creditors and debtors and, like a court-ordered restructuring, must also be approved by the court.
Canada
Bankruptcy, also referred to as bankruptcy in Canada, is governed by Bankruptcy and Insolvency Act and applies to businesses and individuals, for example, Target Canada, a subsidiary of Target Corporation Canada, the second largest discount retailer in the United States. filed for bankruptcy on January 15, 2015, and closed all of its stores on April 12th. The Office of the Bankruptcy Superintendent, a federal agency, is responsible for overseeing that bankruptcy is administered fairly and regularly by all licensed Supervisors in Canada.
Supervisor in bankruptcy, 1041 people are licensed to manage insolvency, bankruptcy and proposal plantations and are governed by the Bankruptcy and Insolvency Act of Canada.
Bankruptcy is filed when a person or a company becomes bankrupt and can not pay their debts when maturing and if they have at least $ 1,000 in debt.
In 2011, the Bankruptcy Superintendent reported that the trustee in Canada filed 127,774 plantations bankrupt. Consumer plantations are mostly, with 122 999 estates. The consumer share of the 2011 volume is divided into 77,993 bankruptcies and 45,006 consumer proposals. This represents an 8.9% reduction from 2010. The commercial area proposed by Canadian trustees in 2011 is 4,775 plantations, 3,643 bankruptcies and 1,132 proposals Division 1. This represents an 8.6% reduction over 2010.
- Trustee job
Some of the tasks of the trustee in bankruptcy are:
- Review files for all fraudulent or transactional preferences
- The creditor chair meeting
- Sell non-excluded assets
- Object for bankrupt exit
- Distribute funds to creditor
- Creditor meeting
Creditors become involved by attending a creditor meeting. The trustee calls the first creditor meeting for the following purposes:
- To consider bankruptcy
- To confirm the appointment of a trustee or to replace another in an existing place
- To appoint an inspector
- To provide guidance to the trustee as the creditor can view in accordance with the reference to the administration of the estate.
- Consumer proposals
In Canada, one can submit a consumer proposal as an alternative to bankruptcy. The consumer proposal is the settlement of negotiations between the debtor and their creditor.
A typical proposal will involve debtors who make monthly payments for a maximum of five years, with funds distributed to their creditors. Although most proposals require payment less than the full amount of debt, in most cases, the lender accepts the deal - because otherwise, the next alternative may be a personal bankruptcy, in which the creditor gets less money. The creditors have 45 days to accept or reject the consumer's proposal. Once the proposal is received by the creditor and the Court, the debtor makes payment to the Administrator's Proposal each month (or as specified in their proposal), and the general lender is prohibited from taking further legal or collection action. If a proposal is rejected, the debtor is returned to a previous bankruptcy and may have no alternative other than to declare a personal bankruptcy.
Consumer proposals can only be made by debtors with debts up to a maximum of $ 250,000 (excluding mortgages on their primary residence). If the debt is greater than $ 250,000, the proposal should be filed under Division 1 Part III of the Insolvency and Bankruptcy Law. An Administrator is required in the Consumer Proposal, and a Trustee in Division I Proposal (this is almost the same even if the term is not exchangeable). An Administrator Proposal is almost always a licensed trustee in bankruptcy, although Superintendent of Bankruptcy may appoint others to serve as an administrator.
In 2006, there were 98,450 personal insolvency bankruptcies in Canada: 79,218 bankruptcies and 19,232 consumer proposals.
China
The People's Republic of China legalized bankruptcy in 1986, and a wider and fuller revised law came into force in 2007.
ireland
Bankruptcy in Ireland applies only to individuals. Other bankruptcy processes including liquidation and checks are used to deal with corporate bankruptcy.
The Irish bankruptcy law has become a significant commentary, both from government and media sources, as it requires reform. Section 7 The Civil Law (Other Provisions) of the 2011 Act has initiated this process and the government has committed to further reforms.
India
The Indian Parliament in the first week of May 2016 passes Insolvency and Bankruptcy Code 2016 (New Code). Previously clear laws about corporate bankruptcy do not exist, although individual bankruptcy laws have existed since 1874. Previous laws enacted enacted in 1920 called the Provincial Insolvency Law.
The legal definition of bankruptcy, bankruptcy, liquidation and dissolution is contested in the Indian legal system. There are no laws or regulations enacted in bankruptcy that indicate a condition of inability to satisfy a creditor's request as is common in many other jurisdictions.
The twisted company is in a court jurisdiction that could take a decade even after the company is actually declared bankrupt. On the other hand, restructuring of supervision on the orders of the Industrial and Financial Reconstruction Board is generally carried out using curators by public entities.
Netherlands
The Dutch bankruptcy law is governed by the Dutch Bankruptcy Code ( Faillissementswet ). This code includes three separate legal processes.
- The first is bankruptcy ( Faillissement ). The purpose of bankruptcy is the liquidation of corporate assets. Bankruptcy applies to individuals and companies.
- The second legal process in Faillissementswet is Surseance van betaling . The Surseance van betaling applies only to companies. The goal is to reach agreement with corporate creditors. This is comparable to applying for protection against creditors.
- The third process is Schuldsanering . This process is designed for individuals only and is the result of a court decision. The judge pointed to the monitor. Monitor is an independent third party that monitors an ongoing individual business and decides on financial issues during the "Schuldsanering" period. Individuals can travel abroad freely after the judge's decision on this case.
Russian
Federal Law no. 127-FZ "On Bankruptcy (Bankruptcy)" dated October 26, 2002 (as amended) ("Bankruptcy Act"), superseded the previous law in 1998, to address the above problems better and wider failure of action. Russian bankruptcy law is intended for various borrowers: individuals and companies of all sizes, with the exception of state-owned enterprises, government agencies, political parties and religious organizations. There are also specific rules for insurance companies, professional participants from securities markets, agricultural organizations and other special laws for financial institutions and companies in a natural monopoly in the energy industry. Federal Law no. 40-FZ "About Bankruptcy" dated February 25, 1999 (as amended) ("Loan Agreement of Credit Institutions") contains specific provisions relating to the opening of insolvency proceedings related to credit companies. Act on Bankruptcy Provisions, credit organizations used in conjunction with the provisions of the Bankruptcy Law.
Hukum kepailitan menyediakan tahapan-tahapan proses kepailitan berikut: o Prosedur pengawasan atau Pengawasan (nablyudeniye); o Pemulihan ekonomi (finansovoe ozdorovleniye); o Kontrol eksternal (vneshneye upravleniye); o Likuidasi (konkursnoye proizvodstvo) dan o Perjanjian Amisable (mirovoye soglasheniye).
The main face of the bankruptcy process is the insolvency officer (trustee in bankruptcy, bankruptcy manager). At various stages of bankruptcy, it must be determined: temporary officers in the Monitoring procedure, external manager in External control, recipient or administrative officer in Economic recovery, liquidator. During the bankruptcy of the guardian in bankruptcy (insolvency of officers) has a decisive influence on the movement of assets (property) of the debtor - the debtor and has a key influence on the economic and legal aspects of its operation.
South Africa
Switzerland
Under Swiss law, bankruptcy can be a consequence of bankruptcy. This is a court order form of the enforceable payable process, in general, only for registered commercial entities. In bankruptcy, all assets of the debtor are liquidated under the administration of the creditors, although the law provides for debt restructuring options similar to those in Chapter 11 of the US Bankruptcy code.
Swedish
In Sweden, bankruptcy (Sweden: konkurs) is a formal process that may involve companies or individuals. It is not the same as bankruptcy, that is, the inability to pay the debt that should be paid. A creditor or the company itself may file for bankruptcy. An external bankruptcy manager takes over the company or the asset of the person, and tries to sell as much as possible. A person or company in bankruptcy can not access its assets (with some exceptions).
The formal bankruptcy process is rarely done for individuals. Creditors can claim money through Enforcement Administration, and lenders usually do not benefit from individual bankruptcy because there are fees from bankruptcy managers who have priority. Unpaid debts remain after bankruptcy for the individual. The highly indebted person can get the debt management procedure (Sweden: skuldanering). On apps, they get a payment plan where they pay as much as they can for five years, and then all the remaining debt is canceled. Debts stemming from a ban on business operations (issued by courts, generally for fraudulent taxes or fraudulent business practices) or indebted to victims of crime as compensation for damages, are exempt from this - and, as before this process was introduced in 2006, remains for life. Unpaid debts during the 3-10 year period are canceled. Often victims of crime stop their claims after several years since criminals often have no job income and may be hard to find, while banks make sure their claims are not canceled. The most common reasons for personal bankruptcy in Sweden are diseases, unemployment, divorce or corporate bankruptcy.
For companies, formal bankruptcy is a normal effect of bankruptcy, even if there is a reconstruction mechanism in which the company can be given time to resolve the situation, for example by seeking investors. Formal bankruptcy involves contracting a bankruptcy manager, ensuring that assets are sold and money divided by priority of legal claims, and no other way. The bank has such a priority. After the bankruptcy of the company, it was terminated. Activities may continue in new companies that have bought important assets from bankrupt companies.
United Kingdom
Bankruptcies in the UK (in the strictest sense of the law) are only related to individuals (including sole proprietors) and partnerships. Companies and other companies enter into different legal insolvency procedures named: liquidation and administration (administrative order and curator administration). However, the term 'bankruptcy' is often used when referring to companies in the media and in public conversations. Bankruptcy in Scotland is called sequestration. To file for bankruptcy in Scotland, one must have more than Ã, Â £ 1,500 of debt.
The trustee in bankruptcy must be an Authorized Recipient (civil servant) or a licensed bankruptcy practitioner. Current law in England and Wales is largely derived from the Bankruptcy Act of 1986. Following the introduction of the 2002 Company Law, the current UK bankruptcy usually lasts no more than 12 months, and may be less if the Official Receiver files in the inquiry certificate court are completed. It is expected that the liberalization of the British Government against the British bankruptcy regime will increase the number of bankruptcy cases; initially, the case increases, as the Bankruptcy Services statistics stand out. Since 2009, the introduction of Debt Relief Order has led to a dramatic decline in bankruptcy, the latest forecast for 2014/15 year significantly less than 30,000 cases.
- Retire
The UK bankruptcy law was amended in May 2000, effective May 29, 2000. The debtor may now retain a working pension while in bankruptcy, except in rare cases.
- Proposed reforms
The government has updated the legislation (2016) to streamline the application process for UK bankruptcy. British residents now need to apply online for bankruptcy - there is an upfront cost of Ã, Â £ 655. The process for the population of Northern Ireland is different - the applicant must follow a longer implementation process through the courts.
United States
Bankruptcy in the United States is a matter placed under federal jurisdiction by the United States Constitution (in Section 1, Section 8, Section 4), which empowers Congress to impose a "uniform Law on the Bankruptcy problem throughout the United States". Congress has enacted laws governing bankruptcy, particularly in the form of the Bankruptcy Code, located at Title 11 of the United States Code.
A debtor declares bankruptcy to get help from debt, and this is usually done either through debt relief or through debt restructuring. When a debtor submits a voluntary appeal, the bankruptcy case begins..
Payables and exclusions
While bankruptcy cases are always filed in the United States Bankruptcy Court (additional to US District Courts), bankruptcy cases, particularly with respect to the validity of claims and exemptions, often depend on State law. Bankruptcy Exemption defines a property that can be held by the debtor and maintained through bankruptcy. Certain private and real property rights may be exempted on "Schedule C" of the debtor's bankruptcy form, and are effectively taken outside the bankruptcy property of the debtor. Bankruptcy exclusions are only available to individuals who file for bankruptcy.
There are two alternative systems that can be used to "free" property from bankruptcy properties, federal exclusions (available in some states but not all), and state exceptions (which vary widely between states). For example, Maryland and Virginia, which are neighboring countries, have different amounts of personal liberation that can not be confiscated for debt repayment. This amount is $ 6,000 first in property or cash in Maryland, but usually only the first $ 5,000 in Virginia. Therefore state law plays a major role in many cases of bankruptcy, so there may be significant differences in the outcome of bankruptcy cases depending on the country in which it is filed.
After the bankruptcy petition is filed, the court schedules a session called a meeting of 341 or creditor meeting , in which the responsible party and the bankrupt creditor review the applicant's petition and support schedule, question the applicant, and can challenge exceptions that they believe are inappropriate.
Chapter
There are six types of bankruptcy under the Bankruptcy Code, located in Title 11 â € <â €
An important feature that applies to all types of bankruptcy filing is to stay automated. Staying automatic means that the demand for bankruptcy protection automatically stops most lawsuits, repossessions, foreclosures, evictions, garnishments, attachments, utility shut-offs, and debt collection activities.
The most common types of personal bankruptcy for individuals are Chapter 7 and Chapter 13. Chapter 7, known as "direct bankruptcy" involves the release of a particular debt without repayment. Chapter 13, involves a debt repayment plan for several years. Whether a person is eligible for Chapter 7 or Chapter 13 is partly determined by income. As many as 65% of all US consumer bankruptcy filings are Chapter 7.
Before the consumer can obtain bankruptcy under Chapter 7 or Chapter 13, the debtor will credit counseling with an approved counseling body before applying for bankruptcy and to undertake education in personal financial management of an approved agency prior to disposal of debt either in Chapter 7 or Chapter 13 Several studies on the operation of credit counseling requirements indicate that it provides little benefit to debtors who receive counseling because the only realistic option for many is to seek help under the Bankruptcy Code.
Corporations and other business forms are usually files under Chapter 7 or 11.
Chapter 7
Often called "straight bankruptcy" or "simple bankruptcy," bankruptcy Chapter 7 could potentially allow debtors to eliminate some or all of their debt over a three or four month period. In a typical consumer bankruptcy, the only sustained debt of Chapter 7 is student loans, child support allowances, some tax bills and criminal penalties. Credit cards, payday loans, personal loans, medical bills, and almost all other bills are settled.
In Chapter 7, the debtor submits an exclusion property to a bankruptcy trustee, who then liquidates the property and distributes the proceeds to the creditor of the debtor. Instead, the debtor is entitled to the release of some debt. However, the debtor is not granted exemption if found guilty of some kind of inappropriate behavior (eg, hiding records relating to financial condition) and certain debt (eg husband and wife and child support and most student loans). Some taxes are not dismissed even though the debtor is generally fired from debt. Many individuals in financial difficulties only own the liberated property (eg, clothing, household goods, older cars, or their trading or profession tools) and do not need to submit any property to the trustee. The amount of property that can be exempt by the debtor varies from one state to another (as noted above, Virginia and Maryland have a difference of $ 1,000.) Help Chapter 7 is available only once in an eight-year period. Generally, the secured creditors' rights to their guarantees continue, even though their debts are exhausted. For example, in the absence of arrangements by the debtor to hand over the car or "reassert" debt, the creditor with security interests in the debtor's car can take over the car again even if the debt to the creditors runs out.
Ninety-one percent of US individuals who petition for assistance under Chapter 7 hire lawyers to petition them. The typical cost of a lawyer is $ 1,170.00. The alternative to filing with a lawyer is: apply for a seal, hire a non-lawyer petitioner, or use online software to produce a petition.
To be eligible to file for a consumer bankruptcy under Chapter 7, the debtor must qualify under the legal "judicial means". The test means is meant to make it more difficult for a large number of debtors individuals who are experiencing financial difficulties whose debts mainly are consumer debt to qualify for assistance under Chapter 7 of the Bankruptcy Code. "Test means" is used in cases where an individual with prime consumer debt has more than average annual income for households of an equivalent size, calculated over a period of 180 days prior to archiving. If an individual has to "take" a "test" means, their average monthly income over this 180-day period is reduced by a series of allowances for the cost of living and payment of secured debt in very complex calculations that may or may not accurately reflect that actual monthly budget individual. If the test result means it does not show any disposable income (or in some cases a very small amount) then the individual qualifies for Chapter 7 relief. A person who fails a test will have his or her chapter 7 case dismissed, or may have to turn the case into chapter 13 bankruptcy.
If the debtor is not eligible for assistance under Chapter 7 of the Bankruptcy Code, either because the Test Means or because Chapter 7 does not provide a permanent solution to the payment of arrears for secure debt, such as mortgages or vehicle loans, debtors can still seek help under Chapter 13 of Code. The Chapter 13 plan often does not require the repayment of debts without public guarantees, such as credit cards or medical bills.
Generally, a trustee sells most of the debtor's assets to pay the creditors. However, certain debtors' assets will be protected to some extent with the exception of bankruptcy. This includes Social Security payments, unemployment compensation, limited equity at home, car, or truck, household goods and equipment, trading tools, and books. However, these exceptions vary from state to state.
Chapter 11
In Chapter 11 of bankruptcy, the debtor retains ownership and control of the asset and is referred to as the debtor in the possession (DIP). The debtor in possession carries out the day-to-day operations of the business while the creditor and debtor work with the Bankruptcy Court to negotiate and finalize the plan. After fulfilling certain requirements (eg, fairness among creditors, priority of certain creditor) the creditor is allowed to vote on the proposed plan. If a plan is confirmed, the debtor will continue to operate and pay the debt in accordance with the provisions of the confirmed plan. If a majority of a particular creditor does not vote to confirm the plan, additional terms may be imposed by the court to confirm the plan. The debtor who filed for Chapter 11 protection for the second time was known informally as the "Chapter 22" reporter.
Chapter 13
In Chapter 13, debtors retain ownership and ownership of all their assets, but must devote a portion of future earnings to pay creditors, generally for three to five years. The payment amount and the payment plan period depend on various factors, including the value of the debtor's property and the amount of debtor's income and expenses. Under this chapter, the debtor may submit a payment plan to pay the creditor for three to five years. If the monthly income is less than the state median income, the plan is for three years, unless the court finds "only reason" to extend the plan for longer periods. If the borrower's monthly income is greater than the average income for the individual in the debtor country, the plan should be generally for five years. A plan can not exceed the five-year limit.
Assistance under Chapter 13 is available only to individuals with fixed income whose debts do not exceed the specified limits. If the debtor is an individual or sole proprietor, the debtor is allowed to file bankruptcy Chapter 13 to repay all or part of the debt. Secured creditors may be entitled to a larger payment than unsecured creditors.
Unlike Chapter 7, debtors in Chapter 13 can keep all property, whether or not freed. If the plan appears to be feasible and if the debtor complies with all other requirements, a bankruptcy court usually confirms the plan and the debtor and creditor are bound by its terms. The creditor has no vote in the formulation of the plan, other than to refuse it, if appropriate, on the grounds that he does not comply with any of the requirements of the Code law. Generally, the debtor makes a payment to the trustee who disburses funds in accordance with the provisions of the plan confirmed.
When the debtor completes payment in accordance with the provisions of the plan, the court formally provides debtors the release of debt provided in the plan. However, if the debtor fails to make an agreed payment or fails to seek or obtain court approval of the modified plan, a bankruptcy court will usually refuse the case on a motion from the trustee. After dismissal, the creditor may continue to seek legal remedies for the state to recover unpaid debts.
Europe
In 2004, the number of bankruptcies reached record highs in many European countries. In France, the company's bankruptcy rate increased by more than 4%, in Austria more than 10%, and in Greece reached more than 20%. An increase in the number of insolvencies, however, does not show the total financial impact of insolvency in each country because there is no indication of the size of each case. Increasing the number of bankruptcy cases does not necessarily mean an increase in the level of bad debt relief for the economy as a whole.
Bankruptcy statistics are also additional indicators. There is a time lag between financial difficulties and bankruptcy. In many cases, months or even years passed between financial problems and the commencement of bankruptcy proceedings. Legal, tax and cultural issues can further distort bankruptcy figures, especially when compared to international bases. Two examples:
- In Austria, more than half of all potential bankruptcy proceedings in 2004 were not opened, due to insufficient funding.
- In Spain, it is economically unfavorable to open bankruptcy proceedings against a particular type of business, and therefore the amount of bankruptcy is very low. For comparison: In France, over 40,000 bankruptcy proceedings opened in 2004, but under 600 opened in Spain. At the same time, the rate of elimination of average non-performing loans in France was 1.3% compared with Spain with 2.6%.
The number of bankruptcies for private individuals also does not show the whole picture. Only a small fraction of households are heavily indebted for bankruptcy. The two main reasons for this are the stigma of declaring bankruptcy and potential business losses.
After soaring in bankruptcy in the last decade, a number of European countries, such as France, Germany, Spain and Italy, began to change their bankruptcy laws in 2013. They modeled the new law after Chapter 11 of US Bankruptcy. Code. Today, most bankruptcy cases have ended in liquidation in Europe rather than businesses that survived the crisis. These new legal models are meant to change this; MPs hope to turn bankruptcy into an opportunity to restructure rather than capital punishment for companies.
Effective sovereign bankruptcy
Technically, countries do not collapse directly because of the sovereign default event itself. However, the tumultuous events that follow suit can degrade the country, so in common language we describe countries as bankrupt.
Some examples of this are when a Korean state bankrupts Imperial China causing its destruction, or more specifically, when the Chang'an (Sui) war with Pyongyang (Goguryeo) in 614 AD ends with the disintegration of the formation in 4 years, although the latter also seems to have decreased and fell about 56 years later. Another example is when the United States, with large financial backing from its allies (creditors), bankrupted the Soviet Union which caused its last destruction.
See also
References
Further reading
- Balleisen, Edward (2001). Navigating Failure: Bankruptcy and Commercial Society in America Antebellum . Chapel Hill: University of North Carolina Press. p.Ã, 322. ISBNÃ, 0-8078-2600-6.
- DePamphilis, Donald M. (2009). Mergers, Acquisitions, and Other Restructuring, 5th Edition . Elsevier, Academic Press. ISBN 978-0-12-374878-2.
- Ma? ko, Rafa ?. "Transboundary bankruptcy law in the European Union" (PDF) . Library Direction . European Parliament Library . Retrieved February 21 2013 .
- Sandage, Scott A. (2006). Born Losers: A History of Failure in America . Cambridge, Mass.: Harvard University Press. ISBNÃ, 0-674-02107-X. Ã,
External links
- Ã, "Bankruptcy". EncyclopÃÆ'Â|dia Britannica . 3 (issue 11). 1911.
- US. Federal Bankruptcy Court
- Official US Bankruptcy Statistics
- U.S. Bankruptcy Court Law
- Executive Office for United States Bankruptcy Trust
- Cornell Bankruptcy Law
- National Consumer Bankruptcy Lawyers Association
- Bankruptcy Research Database (WebBRD)
- The Bankruptcy Services Website in the United Kingdom
- Bankruptcy Statistics in Hong Kong
- Official Testing Information Means
Source of the article : Wikipedia
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