Difference between revisions of "Bankruptcy"
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Not all persons or businesses end up bankrupt as a result of poor financial decisions: economic downturns or technological changes may result in reduced demand for a product, or an accident or illness may leave a person with huge medical bills. | Not all persons or businesses end up bankrupt as a result of poor financial decisions: economic downturns or technological changes may result in reduced demand for a product, or an accident or illness may leave a person with huge medical bills. | ||
| − | In the United States, bankruptcy proceedings are handled under the [[Bankruptcy Code|United States Bankruptcy Code]] and are overseen by a [[bankruptcy court]] (which is equivalent to a District Court but handles only bankruptcy hearings). | + | In the United States, bankruptcy proceedings are handled under the [[Bankruptcy Code|United States Bankruptcy Code]] and are overseen by a [[bankruptcy court]] (which is equivalent to a District Court but handles only bankruptcy hearings). A filing may either be '''voluntary''' (where the debtor seeks relief; this is most common with personal bankruptcies) or '''involuntary''' (where the creditors seek to be paid at least part of what they owe; this is most common with business bankruptcies). |
| − | + | The debtor must file a listing of assets and liabilities, after which time notice is provided to creditors (and, to discourage a debtor from omitting a liability, public notice is also published) to respond to the accuracy of the filing. After all parties have had the chance to be heard, the court makes its ruling (frequently, the parties come to an agreement which the court accepts). | |
| − | + | == Types of bankruptcies== | |
*[[Involuntary bankruptcy]] | *[[Involuntary bankruptcy]] | ||
*[[Consumer bankruptcy]] | *[[Consumer bankruptcy]] | ||
Revision as of 18:15, March 2, 2018
Bankruptcy, in finance and legal arenas, refers to a process whereby a person or business who is unable to pay their debts, may petition a court for relief (in whole or in part) from having to repay the debts, or to obtain more time to do so.
Not all persons or businesses end up bankrupt as a result of poor financial decisions: economic downturns or technological changes may result in reduced demand for a product, or an accident or illness may leave a person with huge medical bills.
In the United States, bankruptcy proceedings are handled under the United States Bankruptcy Code and are overseen by a bankruptcy court (which is equivalent to a District Court but handles only bankruptcy hearings). A filing may either be voluntary (where the debtor seeks relief; this is most common with personal bankruptcies) or involuntary (where the creditors seek to be paid at least part of what they owe; this is most common with business bankruptcies).
The debtor must file a listing of assets and liabilities, after which time notice is provided to creditors (and, to discourage a debtor from omitting a liability, public notice is also published) to respond to the accuracy of the filing. After all parties have had the chance to be heard, the court makes its ruling (frequently, the parties come to an agreement which the court accepts).
