How bankruptcy works in the business world.

Bankruptcy is a major word used in the business word today but even some individuals use it also, through this post:

I want to explain the term bankruptcy.

At what point can an individual file for bankruptcy?

The restriction to filing for bankruptcy.

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What is bankruptcy?

The idea of debt has been existing for a very long time from the period of slave trade when people had to pay off the debt they owe by serving their slave masters for a long time, some also used the tactics of keeping their debt holders in prison until the time their friends or family are eventually able to pay back the loan they owe.

Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.

Different levels of bankruptcy in civilized nations.

Instead of having creditors coming around to ask for the money owed, we now have companies who use the idea of credit card to make people borrow money. In civilized nations, businesses and individuals can declare bankruptcy the moment they are unable to pay back the loans they have. In the united states, which is a very civilized country citizens often file for a chapter 7 and chapter 13 bankruptcy but the fact is that in order to file for bankruptcy, you will have to pay first (can you imagine?) If you will have to file for a chapter 7 bankruptcy in the U.S, you will have to pay $335 and for a chapter 13 bankruptcy $340 will be paid, even when you decide to hire a lawyer to stand for you will still have to pay the lawyer which usually stands between $1500-$4000.

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Conditions required to file for bankruptcy.

Not just everyone is allowed to file for bankruptcy, a test is to be passed by people who choose to do it and chapter 7 bankruptcy is a liquidation bankruptcy by low income earners who usually will have to sell off their properties in order to pay their loan. If the test is passed by those who wish to apply for the loan, then the court usually decides the personal properties that should be sold to cover up for the debt and there are basic restrictions because the debtor may be restricted from using credit cards for some time.

For chapter 13 bankruptcy file, the court usually draws out a specific plan to help the debtor pay back loans and if the debtor can meet up with those plans, the credit card loans may also be forgiven, but in order to be able to for to apply for it, the individual involved must be able to meet certain requirements like a steady means of income.

Filing for bankruptcy might be a temporal relief option but there are debts that cannot be forgiven and that is the tax debt, student loan and the child support loan.