During the decade of the 1990s, business and personal bankru
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Many analysts attribute the high number of bankruptcies to aggressive credit offers by banks and, to a lesser extent, department stores. These companies lure even the most credit challenged (young people and those who have problems managing money) into accepting their credit cards, sometimes offering secured lines of credit, where the cardholder places as little as $100 in a savings account and receives a line of credit five times that amount.
Another reason cited by analysts for the increase is that the old stigma associated with bankruptcy?if you filed for bankruptcy protection, you were somehow inferior and to be looked down upon?no longer exists in most areas of the country. A third reason is a change in attitude of the credit cards issuers. Not long ago, if an individual filed for bankruptcy, that person was unable to obtain credit for years (a bankruptcy filing remains on your Credit Bureau file for 10 years). Today, however, credit card companies operate on a different premise. If you have recently filed for bankruptcy, you are no longer in debt. Therefore, you must have sufficient cash flow to service new debt. Within a month of filing, your mailbox will be flooded with credit card offers.
In the business arena, filing for bankruptcy?stopping creditors from taking legal action?has evolved into just another business strategy.
The three most common types of bankruptcy are:
Chapter 7: The bankrupt's assets are sold to pay creditors, and creditors have no right to the debtor's future earnings.
Chapter 11: A business continues to operate and creditors receive a portion of both current assets and future earnings. This form of bankruptcy is also available to wealthy individuals. (See Wards.com)
Chapter 13: For the typical consumer, where creditors usually receive a portion of the individual's current assets and future earnings.
Although bankruptcy laws are sometimes abused (an individual may file personal bankruptcy every seven years and some individuals do exactly that), bankruptcy is designed as a safety net for businesses or individuals who experience financial difficulties for whatever reason.
Who may file Chapter 7 bankruptcy? How has this changed over the past year?
What are some of the reasons people file bankruptcy?
How does bankruptcy affect interest rates on loans? Credit cards?
Please submit your references.
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1)Chapter 7 bankruptcy, sometimes call a straight bankruptcy is a liquidation proceeding. The debtor turns over all non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to the creditors. The debtor receives a discharge of all dischargeable debts usually within four months. In the vast majority of cases the debtor has no assets that he would lose so Chapter 7 will give that person a relatively quick "fresh start".One of the main purposes of Bankruptcy Law is to give a person, who is hopelessly burdened with debt, a fresh start by wiping out his or her debts.
When a troubled business is badly in debt and unable to service that debt or pay its creditors, it may file (or be forced by its creditors to file) for bankruptcy in a federal court under Chapter 7 ...
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