Quick Overview of Bankruptcy
What is the Definition of the term ‘Bankrupt’?
Bankrupt is defined as a financial state in which an individual – or business – finds themselves in a state of financial insolvency; declaring Bankruptcy is the legal classification of these procedure. An individual or business that has become Bankrupt may:
Find themselves unable to satisfy and or all outstanding debt, rendering them in a Bankrupt state;
Find that the amount of their respective debt(s) have exceeded their income, disallowing them to earn a sufficient amount of income;
Find themselves unable to maintain the operations of their respective livelihood – or business – with regard to any or all outstanding debt;
Undergo liquidation of all remaining assets in order to satisfy any outstanding debt;
Types of Bankruptcy
Upon finding oneself – or one’s business – to be in a Bankrupt state, the following are the most common varieties of bankruptcy claims:
Chapter 7Bankruptcy: In the event that an individual finds themselves to have become Bankrupt, they will be given the opportunity to file for Chapter 7 Bankruptcy; this relieves them of the satisfaction of all debt incurred excluding Federal debts, such as Student Loans – this type of Bankrupt state is unavailable to businesses or commercial operations
Chapter 9 Bankruptcy: In the event that state department or municipality find themselves in a Bankrupt state, they will be given the opportunity to file for Chapter 9 Bankruptcy
Chapter 11 Bankruptcy: This is a type of bankruptcy claim that is geared towards businesses that are financially insolvent; upon filing for Chapter 11 Bankruptcy, the business will be forced to close and may undergo liquidation
Chapter 13 Bankruptcy: This is a type of bankruptcy claim that is also geared towards businesses, but in lieu of terminating the business, investors and trustees involved in the bankrupt business can suggest restructuring endeavors in order to rebuild the business
NEXT: Easy Guide to Understanding Chapter 7 Governing Laws
