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Information and description:
Bankruptcy is a legally declared inability or impairment of
ability of an individual or organization to pay their creditors.
A declared state of bankruptcy can be requested by creditors
in an effort to recoup a portion of what they are owed; however,
in the overwhelming majority of cases, the bankruptcy is initiated
by the bankrupt individual or organization.
Purpose
The primary purpose of the laws of bankruptcy are: (1) to
give an honest debtor a "fresh start" in life by
relieving the debtor of most debts, and (2) to repay creditors
in an orderly manner to the extent that the debtor has property
available for payment.
Bankruptcy allows the debtor to resolve his debts through
the division of his assets among his creditors. Additionally
the declaration of bankruptcy allows debtors to be discharged
of most of the financial obligations, after their assets are
distributed, even if their debts have not been paid in full.
During the pendency of a bankruptcy proceeding, the "Debtor"
is protected from extra Bankruptsy action by creditors by
a legally imposed "stay."
On this principle they trace the origin of bankrupts from
the ancient Roman mensarii or argentarii, who had their tabernae
or mensae in certain public places; and who, when they fled,
or made off with the money that had been entrusted to them,
left only the sign or shadow of their former station behind
them.
Bankruptcy fraud is a business crime of filing for bankruptcy
with criminal intent, that is with the intention of evading
payment for goods even though the buyer has funds that could
be used to pay for them, or accepting payment for goods or
services but not supplying them. Common types of bankurptcy
fraud include petition mills, false oath, concealment of assets,
and fraudulent conveyance. Multiple filings are not per se
fraudulent; as with all things in the law, it depends on the
circumstances. Bankruptcie fraud should be distinguished from
strategic bankruptcies, which is not a criminal act (but may
prejudice a judge against the filer if there is evidence that
bankrutpcy is being used strategically).
Bankruptcy in the United States
It
is a matter placed under Federal jurisdiction by the United
States Constitution (in Article 1, Section 8), which allows
Congress to enact "uniform laws on the subject of Bankruptcie
throughout the United States." Its implementation, however,
is found in statute law. The relevant statutes are incorporated
within the Bankruptcy Code, located at Title 11 of the United
States Code, and amplified by state law in the many places
where Federal law either fails to speak or defers expressly
to state law.
While bankruptcy cases are always filed in United States Bankruptcy
Court (an adjunct to the U.S. District Courts), bankruptcy
cases, particularly with respect to the validity of claims
and exemptions, are often highly dependent upon State law.
State law therefore plays a major role in many cases, and
it is often quite unwise to generalize bankruptcy issues across
state lines.
See also:
• Adverse Credit History
• Credit Counseling
• Debt
Consolidation
* Insolvency
* Bankruptcy problem
•
Experian
• Credit Score
•
List
of Finance Topics
• Personal
Finance
This
article is licensed under the GNU
Free Documentation License.
It uses material from the Wikipedia
article "Bankruptcy".
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