Bankruptcy and Debtor-Creditor Relations
Bankruptcy and Debtor-Creditor Relations
Bankruptcy often conjures up images of the Great Depression, boarded up store fronts, and social disgrace. Today, however, bankruptcy has evolved into a procedure in which a person or business may preserve their remaining assets, reorganize and continue on or obtain a fresh-start in life. Bankruptcy can be defined simply as “the legal process by which the assets of a debtor are sold to pay off creditors so that the debtors can make a fresh start financially” (Brown, Sukys 2006: 578). Found in Title 11 of the United States Code (USC) the Bankruptcy Code consists of several “chapters”, each with its own set of actions and procedures. The four codes most pertinent to business consist of Chapter 7 or ordinary bankruptcy, Chapter 11, also known as reorganization, Chapter 12, a special code dealing exclusively with family farmer debt adjustment, and Chapter 13 or Adjustment of Debts. In all, bankruptcy can be a tool that provides many people with the help and financial safety that they need.
The Debtor and Creditor
Although bankruptcy law provides many services to people, its main objectives are to protect creditors and the debtor. It protects creditors that have extended either money or credit to a debtor by making sure that the debtors remaining assets are spread evenly amongst all creditors. Debtors are allowed an “escape from their financial burdens” and given an opportunity to rebuild (Brown, Sukys 2006: 579). This form of bankruptcy law has only existed for roughly thirty years. The Bankruptcy Reform Act of 1978 included the creation of Chapters 11 and 13 which allowed debtors to retain more assets as well as reorganize. The Reform Act of 1994 further developed these aspects of the law as well as creating the National Bankruptcy Committee. The NBR studies bankruptcy and makes suggestions about how to improve the law. Furthermore, in 2005 bankruptcy law experienced its most dramatic change since the Bankruptcy
Bankruptcy often conjures up images of the Great Depression, boarded up store fronts, and social disgrace. Today, however, bankruptcy has evolved into a procedure in which a person or business may preserve their remaining assets, reorganize and continue on or obtain a fresh-start in life. Bankruptcy can be defined simply as “the legal process by which the assets of a debtor are sold to pay off creditors so that the debtors can make a fresh start financially” (Brown, Sukys 2006: 578). Found in Title 11 of the United States Code (USC) the Bankruptcy Code consists of several “chapters”, each with its own set of actions and procedures. The four codes most pertinent to business consist of Chapter 7 or ordinary bankruptcy, Chapter 11, also known as reorganization, Chapter 12, a special code dealing exclusively with family farmer debt adjustment, and Chapter 13 or Adjustment of Debts. In all, bankruptcy can be a tool that provides many people with the help and financial safety that they need.
The Debtor and Creditor
Although bankruptcy law provides many services to people, its main objectives are to protect creditors and the debtor. It protects creditors that have extended either money or credit to a debtor by making sure that the debtors remaining assets are spread evenly amongst all creditors. Debtors are allowed an “escape from their financial burdens” and given an opportunity to rebuild (Brown, Sukys 2006: 579). This form of bankruptcy law has only existed for roughly thirty years. The Bankruptcy Reform Act of 1978 included the creation of Chapters 11 and 13 which allowed debtors to retain more assets as well as reorganize. The Reform Act of 1994 further developed these aspects of the law as well as creating the National Bankruptcy Committee. The NBR studies bankruptcy and makes suggestions about how to improve the law. Furthermore, in 2005 bankruptcy law experienced its most dramatic change since the Bankruptcy