Source: http://getwiki.net/-bankruptcy
Timestamp: 2019-09-20 02:12:35
Document Index: 66369519

Matched Legal Cases: ['§ 157', 'art 7', 'art 7', '§ 301', '§ 522', '§ 522', '§ 362', '§ 1101', '§ 1126', '§ 109']

GetWiki : bankruptcy
{{Redirect|Bankrupt|the Phoenix album|Bankrupt!}}File:Bankrupt computer store.jpg|thumb|Notice of closure attached to the door of a Computer Shop outlet the day after its parent company declared "bankruptcy" (strictly, put into administration) in the United KingdomUnited Kingdom{{Insolvency}}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.Bankruptcy is not the only legal status that an insolvent person may have, and the term bankruptcy is therefore not a synonym for insolvency. In some countries, such as the United Kingdom, bankruptcy is limited to individuals; other forms of insolvency proceedings (such as liquidation and administration) are applied to companies. In the United States, bankruptcy is applied more broadly to formal insolvency proceedings. In France, the cognate French word banqueroute is used solely for cases of fraudulent bankruptcy, whereas the term faillite (cognate of "failure") is used for bankruptcy in accordance with the law.(fr) Dictionnaire Le Petit Larousse 2013, p 104 & 446
The word bankruptcy is derived from Italian banca rotta, meaning "broken bench", which may stem from a widespread custom in the Republic of Genoa of breaking a moneychanger's bench or counter to signify their insolvency, or which may be only a figure of speech.BOOK, Frank Olds Loveland, A treatise on the law and proceedings in bankruptcy,weblink 1912, The W. H. Anderson Co., 4â€“, DICTIONARY, Bankrupt,weblink Online Etymology Dictionary, 22 April 2014, live,weblink" title="web.archive.org/web/20140323232935weblink">weblink 23 March 2014, DICTIONARY, Bankrupt,weblink Dictionary.com, live,weblink" title="web.archive.org/web/20140326091521weblink">weblink 2014-03-26, WEB, Bankrupt - Definition and More from the Free Merriam-Webster Dictionary,weblink Merriam-Webster Dictionary, 22 April 2014, live,weblink" title="web.archive.org/web/20140323225422weblink">weblink 23 March 2014, WEB, Bankrupt,weblink Oxford Dictionaries, 22 April 2014, live,weblink" title="web.archive.org/web/20140425041038weblink">weblink 25 April 2014,
File:John Law cartoon (1720).png|thumb|upright=0.8|Failure of John Law's Mississippi CompanyMississippi CompanyIn Ancient Greece, bankruptcy did not exist. If a man owed and he could not pay, he and his wife, children or servants were forced into "debt slavery", until the creditor recouped losses through their physical labour. Many city-states in ancient Greece limited debt slavery to a period of five years; debt slaves had protection of life and limb, which regular slaves did not enjoy. However, servants of the debtor could be retained beyond that deadline by the creditor and were often forced to serve their new lord for a lifetime, usually under significantly harsher conditions. An exception to this rule was Athens, which by the laws of Solon forbade enslavement for debt; as a consequence, most Athenian slaves were foreigners (Greek or otherwise).The Statute of Bankrupts of 1542 was the first statute under English law dealing with bankruptcy or insolvency.EB1911, Bankruptcy, Edward William Donoghue, Manson, 3, 322, Bankruptcy is also documented in East Asia. According to al-Maqrizi, the Yassa of Genghis Khan contained a provision that mandated the death penalty for anyone who became bankrupt three times.A failure of a nation to meet bond repayments has been seen on many occasions. Philip II of Spain had to declare four state bankruptcies in 1557, 1560, 1575 and 1596. According to Kenneth S. Rogoff, "Although the development of international capital markets was quite limited prior to 1800, we nevertheless catalog the various defaults of France, Portugal, Prussia, Spain, and the early Italian city-states. At the edge of Europe, Egypt, Russia, and Turkey have histories of chronic default as well."Carmen M. Reinhart, Kenneth S. Rogoff (2009). "This time is different: eight centuries of financial folly". Princeton University Press. p.30. {{ISBN|0-691-14216-5}}
The principal focus of modern insolvency legislation and business debt restructuring practices no longer rests on the elimination of insolvent entities, but on the remodeling of the financial and organizational structure of debtors experiencing financial distress so as to permit the rehabilitation and continuation of the business.For private households, some argue that it is insufficient to merely dismiss debts after a certain period {{citation needed|date=October 2015}}. It is important to assess the underlying problems and to minimize the risk of financial distress to re-occur. It has been stressed that debt advice, a supervised rehabilitation period, financial education and social help to find sources of income and to improve the management of household expenditures must be equally provided during this period of rehabilitation (Refiner et al., 2003; Gerhardt, 2009; Frade, 2010). In most EU Member States, debt discharge is conditioned by a partial payment obligation and by a number of requirements concerning the debtor's behavior. In the United States (US), discharge is conditioned to a lesser extent. The spectrum is broad in the EU, with the UK coming closest to the US system (Reifner et al., 2003; Gerhardt, 2009; Frade, 2010). The Other Member States do not provide the option of a debt discharge. Spain, for example, passed a bankruptcy law (ley concurs) in 2003 which provides for debt settlement plans that can result in a reduction of the debt (maximally half of the amount) or an extension of the payment period of maximally five years (Gerhardt, 2009), but it does not foresee debt discharge.Dubois & Anderson (2010) Managing household debts: Social service provision in the EU. Working paper. Dublin: European Foundation for the Improvement of Living and Working Conditions. euro found.europa.eu {{webarchive|url=https://web.archive.org/web/20131107145903weblink |date=2013-11-07 }}In the US, it is very difficult to discharge federal or federally guaranteed student loan debt by filing bankruptcy.NEWS, Ferral, Katelyn, Narrow bankruptcy laws make it nearly impossible to discharge student debt,weblink 13 March 2018, The Cap Times, Madison.com, 28 December 2017, live,weblink" title="web.archive.org/web/20180313214310weblink">weblink 13 March 2018, Unlike most other debts, those student loans may be discharged only if the person seeking discharge establishes specific grounds for discharge under the Brunner test,WEB, Treff, Leslie, "Undue Hardship" Under Section 523(a)(8): Can the Debtor's Student Loans Be Discharged?,weblink LexisNexis Legal Newsroom, 13 March 2018, 29 October 2012, live,weblink 14 March 2018, under which the court evaluates three factors:
The borrower has made a good faith effort to repay the student loans.
Even if a debtor proves all three elements, a court may permit only a partial discharge of the student loan. Student loan borrowers may benefit from restructuring their payments through a Chapter 13 bankruptcy repayment plan, but few qualify for discharge of part or all of their student loan debt.JOURNAL, Gerson, Seth J., Separate Classification of Student Loans in Chapter 13, Washington University Law Quarterly, January 1995, 73, 1, 269,weblink live,weblink" title="web.archive.org/web/20170223001445weblink">weblink 2017-02-23,
Bankruptcy fraud is a white-collar crime. While difficult to generalize across jurisdictions, common criminal acts under bankruptcy statutes typically involve concealment of assets, concealment or destruction of documents, conflicts of interest, fraudulent claims, false statements or declarations, and fee fixing or redistribution arrangements. Falsifications on bankruptcy forms often constitute perjury. Multiple filings are not in and of themselves criminal, but they may violate provisions of bankruptcy law. In the U.S., bankruptcy fraud statutes are particularly focused on the mental state of particular actions.See 140 Cong. Rec. S14, 461 (daily ed. Oct. 6, 1994).See 18 U.S.C. sec 152. trac.syr.edu. {{webarchive|url=https://web.archive.org/web/20080725123135weblink |date=2008-07-25 }} Bankruptcy fraud is a federal crime in the United States.WEB, 18 U.S. Code Â§ 157,weblink GPO, U.S. Government Publishing Office, 14 May 2017, live,weblink 7 May 2018, Bankruptcy fraud should be distinguished from strategic bankruptcy, which is not a criminal act since it creates a real (not a fake) bankruptcy state. However, it may still work against the filer.All assets must be disclosed in bankruptcy schedules whether or not the debtor believes the asset has a net value. This is because once a bankruptcy petition is filed, it is for the creditors, not the debtor, to decide whether a particular asset has value. The future ramifications of omitting assets from schedules can be quite serious for the offending debtor. In the United States, a closed bankruptcy may be reopened by motion of a creditor or the U.S. trustee if a debtor attempts to later assert ownership of such an "unscheduled asset" after being discharged of all debt in the bankruptcy. The trustee may then seize the asset and liquidate it for the benefit of the (formerly discharged) creditors. Whether or not a concealment of such an asset should also be considered for prosecution as fraud or perjury would then be at the discretion of the judge or U.S. Trustee.
{{See also|Australian insolvency law}}In Australia, bankruptcy is a status which applies to individuals and is governed by the federal Bankruptcy Act 1966.WEB,weblink BANKRUPTCY ACT 1966, www.austlii.edu.au, 2017-01-19, live,weblink" title="web.archive.org/web/20170201112404weblink">weblink 2017-02-01, Companies do not go bankrupt but rather go into liquidation or administration, which is governed by the federal Corporations Act 2001.WEB,weblink CORPORATIONS ACT 2001, www.austlii.edu.au, 2017-01-19, live,weblink" title="web.archive.org/web/20170223213544weblink">weblink 2017-02-23, If a person commits an act of bankruptcy, then a creditor can apply to the Federal Circuit Court or the Federal Court for a sequestration order.WEB,weblink BANKRUPTCY ACT 1966 - SECT 43 Jurisdiction to make sequestration orders, www.austlii.edu.au, 2017-01-19, live,weblink" title="web.archive.org/web/20170131191322weblink">weblink 2017-01-31, Acts of bankruptcy are defined in the legislation, and include the failure to comply with a bankruptcy notice.WEB,weblink BANKRUPTCY ACT 1966 - SECT 40 Acts of bankruptcy, www.austlii.edu.au, 2017-01-19, live,weblink" title="web.archive.org/web/20170131191822weblink">weblink 2017-01-31, A bankruptcy notice can be issued where, among other cases, a person fails to pay a judgment debt.WEB,weblink BANKRUPTCY ACT 1966 - SECT 41 Bankruptcy notices, www.austlii.edu.au, 2017-01-19, live,weblink" title="web.archive.org/web/20170131191333weblink">weblink 2017-01-31, A person can also seek to have themself declared bankrupt by lodging a debtor's petition with the "Official Receiver",WEB,weblink BANKRUPTCY ACT 1966 - SECT 55 Debtor's petition, www.austlii.edu.au, 2017-01-19, live,weblink" title="web.archive.org/web/20170131190947weblink">weblink 2017-01-31, which is the Australian Financial Security Authority (AFSA).WEB,weblink AFSA, 2011-12-31, AFSA, 2012-04-17, live,weblink 2013-08-16, To declare bankruptcy or for a creditor to lodge a petition, the debt must be at least $5,000.All bankrupts must lodge a Statement of Affairs document with AFSA, which includes important information about their assets and liabilities. A bankruptcy cannot be annulled until this document has been lodged.Ordinarily, a bankruptcy lasts three years from the filing of the Statement of Affairs with AFSA.WEB,weblink BANKRUPTCY ACT 1966 - SECT 149 Automatic discharge, www.austlii.edu.au, 2017-01-19, live,weblink" title="web.archive.org/web/20170131191832weblink">weblink 2017-01-31, A Bankruptcy Trustee (in most cases, the Official Receiver) is appointed to deal with all matters regarding the administration of the bankrupt estate. The Trustee's job includes notifying creditors of the estate and dealing with creditor inquiries; ensuring that the bankrupt complies with their obligations under the Bankruptcy Act; investigating the bankrupt's financial affairs; realising funds to which the estate is entitled under the Bankruptcy Act and distributing dividends to creditors if sufficient funds become available.For the duration of their bankruptcy, all bankrupts have certain restrictions placed upon them. For example, a bankrupt must obtain the permission of their trustee to travel overseas. Failure to do so may result in the bankrupt being stopped at the airport by the Australian Federal Police. Additionally, a bankrupt is required to provide their trustee with details of income and assets. If the bankrupt does not comply with the Trustee's request to provide details of income, the trustee may have grounds to lodge an Objection to Discharge, which has the effect of extending the bankruptcy for a further five years.The realisation of funds usually comes from two main sources: the bankrupt's assets and the bankrupt's wages. There are certain assets that are protected, referred to as protected assets. These include household furniture and appliances, tools of the trade and vehicles up to a certain value. All other assets of value are sold. If a house or car is above a certain value, the bankrupt can buy the interest back from the estate in order to keep the asset. If the bankrupt does not do this, the interest vests in the estate and the trustee is able to take possession of the asset and sell it.The bankrupt must pay income contributions if their income is above a certain threshold. If the bankrupt fails to pay, the trustee can issue a notice to garnishee the bankrupt's wages. If that is not possible, the Trustee may seek to extend the bankruptcy for a further five years.Bankruptcies can be annulled prior to the expiration of the normal three-year period if all debts are paid out in full. Sometimes a bankrupt may be able to raise enough funds to make an Offer of Composition to creditors, which would have the effect of paying the creditors some of the money they are owed. If the creditors accept the offer, the bankruptcy can be annulled after the funds are received.After the bankruptcy is annulled or the bankrupt has been automatically discharged, the bankrupt's credit report status is shown as "discharged bankrupt" for some years. The maximum number of years this information can be held is subject to the retention limits under the Privacy Act. How long such information is on a credit report may be shorter, depending on the issuing company, but the report must cease to record that information based on the criteria in the Privacy Act.
In Brazil, the Bankruptcy Law (11.101/05) governs court-ordered or out-of-court receivership and bankruptcy and only applies to public companies (publicly traded companies) with the exception of financial institutions, credit cooperatives, consortia, supplementary scheme entities, companies administering health care plans, equity companies and a few other legal entities. It does not apply to state-run companies.Current law covers three legal proceedings. The first one is bankruptcy itself ("FalÃªncia"). Bankruptcy is a court-ordered liquidation procedure for an insolvent business. The final goal of bankruptcy is to liquidate company assets and pay its creditors.The second one is Court-ordered Restructuring (RecuperaÃ§Ã£o Judicial). The goal is to overcome the business crisis situation of the debtor in order to allow the continuation of the producer, the employment of workers and the interests of creditors, leading, thus, to preserving company, its corporate function and develop economic activity. It's a court procedure required by the debtor which has been in business for more than two years and requires approval by a judge.The Extrajudicial Restructuring (RecuperaÃ§Ã£o Extrajudicial) is a private negotiation that involves creditors and debtors and, as with court-ordered restructuring, also must be approved by courts.WEB,weblink Brazil. Law 11,105/05, Planalto.gov.br, 2005-02-09, 2012-04-17, live,weblink" title="web.archive.org/web/20120414131106weblink">weblink 2012-04-14,
Bankruptcy, also referred to as insolvency in Canada, is governed by the Bankruptcy and Insolvency Act and is applicable to businesses and individuals, for example, Target Canada, the Canadian subsidiary of the Target Corporation, the second-largest discount retailer in the United States filed for bankruptcy in January 15, 2015, and closed all of its stores by April 12. The office of the Superintendent of Bankruptcy, a federal agency, is responsible for overseeing that bankruptcies are administered in a fair and orderly manner by all licensed Trustees in Canada.Trustees in bankruptcy, 1041 individuals licensed to administer insolvencies, bankruptcy and proposal estates and are governed by the Bankruptcy and Insolvency Act of Canada.Bankruptcy is filed when a person or a company becomes insolvent and cannot pay their debts as they become due and if they have at least $1,000 in debt.In 2011, the Superintendent of bankruptcy reported that trustees in Canada filed 127,774 insolvent estates. Consumer estates were the vast majority, with 122 999 estates.WEB,weblink Insolvency Statistics in Canadaâ€”2011 (Table 2) - Office of the Superintendent of Bankruptcy Canada, Ic.gc.ca, 2013-07-20, live,weblink" title="web.archive.org/web/20130629074911weblink">weblink 2013-06-29, The consumer portion of the 2011 volume is divided into 77,993 bankruptcies and 45,006 consumer proposals. This represented a reduction of 8.9% from 2010. Commercial estates filed by Canadian trustees in 2011 4,775 estates, 3,643 bankruptcies and 1,132 Division 1 proposals.WEB,weblink Insolvency Statistics in Canadaâ€”2011 (Table 3) - Office of the Superintendent of Bankruptcy Canada, Ic.gc.ca, 2013-07-20, live,weblink 2013-06-29, This represents a reduction of 8.6% over 2010.
Creditors' meetings:
In Canada, a person can file a consumer proposal as an alternative to bankruptcy. A consumer proposal is a negotiated settlement between a debtor and their creditors.A typical proposal would involve a debtor making monthly payments for a maximum of five years, with the funds distributed to their creditors. Even though most proposals call for payments of less than the full amount of the debt owing, in most cases, the creditors accept the dealâ€”because if they do not, the next alternative may be personal bankruptcy, in which the creditors get even less money. The creditors have 45 days to accept or reject the consumer proposal. Once the proposal is accepted by both the creditors and the Court, the debtor makes the payments to the Proposal Administrator each month (or as otherwise stipulated in their proposal), and the general creditors are prevented from taking any further legal or collection action. If the proposal is rejected, the debtor is returned to his prior insolvent state and may have no alternative but to declare personal bankruptcy.A consumer proposal can only be made by a debtor with debts to a maximum of $250,000 (not including the mortgage on their principal residence). If debts are greater than $250,000, the proposal must be filed under Division 1 of Part III of the Bankruptcy and Insolvency Act. An Administrator is required in the Consumer Proposal, and a Trustee in the Division I Proposal (these are virtually the same although the terms are not interchangeable). A Proposal Administrator is almost always a licensed trustee in bankruptcy, although the Superintendent of Bankruptcy may appoint other people to serve as administrators.In 2006, there were 98,450 personal insolvency filings in Canada: 79,218 bankruptcies and 19,232 consumer proposals."Insolvency in Canada in 2006" {{webarchive |url=https://web.archive.org/web/20070329033435weblink |date=March 29, 2007 }}: Office of the Superintendent of Bankruptcy (Industry Canada). Retrieved 2007-05-30.
Commercial restructuring:
Bankruptcy in Ireland applies only to natural persons. Other insolvency processes including liquidation and examinership are used to deal with corporate insolvency.Irish bankruptcy law has been the subject of significant comment, from both government sources and the media, as being in need of reform. Part 7 of the Civil Law (Miscellaneous Provisions) Act 2011WEB,weblink Part 7 of the Civil Law Miscellaneous Provisions Act 2011, 21 September 2011, live,weblink" title="web.archive.org/web/20120119020212weblink">weblink 19 January 2012, has started this process and the government has committed to further reform.
{{update|section|date=December 2016}}The Parliament of India in the first week of May 2016 passed Insolvency and Bankruptcy Code 2016 (New Code). Earlier a clear law on corporate bankruptcy did not exist, even though individual bankruptcy laws have been in existence since 1874. The earlier law in force was enacted in 1920 called the Provincial Insolvency Act.The legal definitions of the terms bankruptcy, insolvency, liquidation and dissolution are contested in the Indian legal system. There is no regulation or statute legislated upon bankruptcy which denotes a condition of inability to meet a demand of a creditor as is common in many other jurisdictions.Winding up of companies was in the jurisdiction of the courts which can take a decade even after the company has actually been declared insolvent. On the other hand, supervisory restructuring at the behest of the Board of Industrial and Financial Reconstruction is generally undertaken using receivership by a public entity.
Federal Law No. 127-FZ "On Insolvency (Bankruptcy)" dated 26 October 2002 (as amended) (the "Bankruptcy Act"), replacing the previous law in 1998, to better address the above problems and a broader failure of the action.Russian insolvency law is intended for a wide range of borrowers: individuals and companies of all sizes, with the exception of state-owned enterprises, government agencies, political parties and religious organizations. There are also special rules for insurance companies, professional participants of the securities market, agricultural organizations and other special laws for financial institutions and companies in the natural monopolies in the energy industry.Federal Law No. 40-FZ "On Insolvency (Bankruptcy)" dated 25 February 1999 (as amended) (the "Insolvency Law of Credit Institutions") contains special provisions in relation to the opening of insolvency proceedings in relation to the credit company. Insolvency Provisions Act, credit organizations used in conjunction with the provisions of the Bankruptcy Act.Bankruptcy law provides for the following stages of insolvency proceedings:â€¢ Monitoring procedure or Supervision (nablyudeniye);â€¢ The economic recovery (finansovoe ozdorovleniye);â€¢ External control (vneshneye upravleniye);â€¢ Liquidation (konkursnoye proizvodstvo) andâ€¢ Amicable Agreement (mirovoye soglasheniye).The main face of the bankruptcy process is the insolvency officer (trustee in bankruptcy, bankruptcy manager). At various stages of bankruptcy, he must be determined: the temporary officer in Monitoring procedure, external manager in External control, the receiver or administrative officer in The economic recovery, the liquidator. During the bankruptcy trustee in bankruptcy (insolvency officer) has a decisive influence on the movement of assets (property) of the debtor - the debtor and has a key influence on the economic and legal aspects of its operations.
In Sweden, bankruptcy (Swedish: konkurs) is a formal process that may involve a company or individual. It is not the same as insolvency, which is inability to pay debts that should have been paid. A creditor or the company itself can apply for bankruptcy. An external bankruptcy manager takes over the company or the assets of the person, and tries to sell as much as possible. A person or a company in bankruptcy can not access its assets (with some exceptions).The formal bankruptcy process is rarely carried out for individuals.WEB,weblink Konkurs â€“ Vad Ã¤r konkurs?, sv, Skatteverket.se, 2009-05-28, 2012-04-17, dead,weblink" title="web.archive.org/web/20110809022942weblink">weblink 2011-08-09, Creditors can claim money through the Enforcement Administration anyway, and creditors do not usually benefit from the bankruptcy of individuals because there are costs of a bankruptcy manager which has priority. Unpaid debts remain after bankruptcy for individuals. People who are deeply in debt can obtain a debt arrangement procedure (Swedish: skuldsanering). On application, they obtain a payment plan under which they pay as much as they can for five years, and then all remaining debts are cancelled. Debts that derive from a ban on business operations (issued by court, commonly for tax fraud or fraudulent business practices) or owed to a crime victim as compensation for damages, are exempted from thisâ€”and, as before this process was introduced in 2006, remain lifelong.WEB,weblink EvighetsgÃ¤ldenÃ¤rer, synpunkter frÃ¥n Skatteverket 2004 Skatteverkets skrivelse 041229, sv, Fattiga.se, 2012-04-17, live,weblink" title="web.archive.org/web/20120314232824weblink">weblink 2012-03-14, Debts that have not been claimed during a 3-10 year period are cancelled. Often crime victims stop their claims after a few years since criminals often do not have job incomes and might be hard to locate, while banks make sure their claims are not cancelled. The most common reasons for personal insolvency in Sweden are illness, unemployment, divorce or company bankruptcy.For companies, formal bankruptcy is a normal effect of insolvency, even if there is a reconstruction mechanism where the company can be given time to solve its situation, e.g. by finding an investor. The formal bankruptcy involves contracting a bankruptcy manager, who makes certain that assets are sold and money divided by the priority the law claims, and no other way. Banks have such a priority. After a finished bankruptcy for a company, it is terminated. The activities might continue in a new company which has bought important assets from the bankrupted company.
Bankruptcy in the United Kingdom (in a strict legal sense) relates only to individuals (including sole proprietors) and partnerships. Companies and other corporations enter into differently named legal insolvency procedures: liquidation and administration (administration order and administrative receivership). However, the term 'bankruptcy' is often used when referring to companies in the media and in general conversation. Bankruptcy in Scotland is referred to as sequestration. To apply for bankruptcy in Scotland, an individual must have more than Â£1,500 of debt.A trustee in bankruptcy must be either an Official Receiver (a civil servant) or a licensed insolvency practitioner. Current law in England and Wales derives in large part from the Insolvency Act 1986. Following the introduction of the Enterprise Act 2002, a UK bankruptcy now normally last no longer than 12 months, and may be less if the Official Receiver files in court a certificate that investigations are complete. It was expected that the UK Government's liberalization of the UK bankruptcy regime would increase the number of bankruptcy cases; initially, cases increased, as the Insolvency Service statistics appear to bear out. Since 2009, the introduction of the Debt Relief Order has resulted in a dramatic fall in bankruptcies, the latest estimates for year 2014/15 being significantly less than 30,000 cases.
{| class=wikitable|+ UK Bankruptcy statistics
!Year !!Bankruptcies !!IVAs !!Total
|46,741
|67,584
|107,288
|106,645
|106,544
The UK bankruptcy law was changed in May 2000, effective May 29, 2000.WEB,weblink Guide to Bankruptcy, GOV.UK, 7 May 2018, live,weblink 17 February 2018, Debtors may now retain occupational pensions while in bankruptcy, except in rare cases.
The Government have updated legislation (2016) to streamline the application process for UK bankruptcy. UK residents now need to apply online for bankruptcy - there is an upfront fee of Â£655. The process for residents of Northern Ireland differs - applicants must follow the older process of applying through the courts.
File:Detroit, USA Taken From Windsor, Canada.jpg|thumb|right|In 2013, Detroit filed the largest municipal bankruptcy case in U.S. history.]]Bankruptcy in the United States is a matter placed under federal jurisdiction by the United States Constitution (in Article 1, Section 8, Clause 4), which empowers Congress to enact "uniform Laws on the subject of Bankruptcies throughout the United States". Congress has enacted statutes governing bankruptcy, primarily in the form of the Bankruptcy Code, located at Title 11 of the United States Code.WEB, U.S. Code: Title 11 - Bankruptcy,weblink Legal Information Institute, Cornell Law School, 19 October 2017, live,weblink 23 September 2017, A debtor declares bankruptcy to obtain relief from debt, and this is normally accomplished either through a discharge of the debt or through a restructuring of the debt. When a debtor files a voluntary petition, their bankruptcy case commences.WEB, 11 U.S. Code Â§ 301 - Voluntary cases,weblink Legal Information Institute, Cornell Law School, 19 October 2017, live,weblink 19 October 2017,
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 dependent upon State law.WEB, 11 U.S. Code Â§ 522 - Exemptions,weblink Legal Information Institute, Cornell Law School, 19 October 2017, live,weblink 9 August 2017, A Bankruptcy Exemption defines the property a debtor may retain and preserve through bankruptcy. Certain real and personal property can be exempted on "Schedule C"WEB,weblink Schedule C- Property Claimed as Exempt, PDF, 2014-03-08, dead,weblink" title="web.archive.org/web/20140610221416weblink">weblink 2014-06-10, of a debtor's bankruptcy forms, and effectively be taken outside the debtor's bankruptcy estate. Bankruptcy exemptions are available only to individuals filing bankruptcy.WEB,weblink Bankruptcy Exemptions Available to Individuals, Uscourts.gov, 2014-03-08, live,weblink" title="web.archive.org/web/20140310230239weblink">weblink 2014-03-10, There are two alternative systems that can be used to "exempt" property from a bankruptcy estate, federal exemptionsWEB,weblink Federal Bankruptcy Exemptions: 11 USC Â§ 522, Law.cornell.edu, 2014-03-08, live,weblink" title="web.archive.org/web/20140226000317weblink">weblink 2014-02-26, (available in some states but not all), and state exemptions (which vary widely between states). For example, Maryland and Virginia, which are adjoining states, have different personal exemption amounts that cannot be seized for payment of debts. This amount is the first $6,000 in property or cash in Maryland,WEB, Code of Maryland, Sec. 11â€“504,weblink General Assembly of Maryland, 19 October 2017, live,weblink" title="web.archive.org/web/20171019220929weblink">weblink 19 October 2017, but normally only the first $5,000 in Virginia.WEB, Code of Virginia, Sec. 34-4. Exemption created.,weblink Legislative Information System, Commonwealth of Virginia, 19 October 2017, live,weblink 19 October 2017, State law therefore plays a major role in many bankruptcy cases, such that there may be significant differences in the outcome of a bankruptcy case depending upon the state in which it is filed.After a bankruptcy petition is filed, the court schedules a hearing called a 341 meeting or meeting of creditors, at which the bankruptcy trustee and creditors review the petitioner's petition and supporting schedules, question the petitioner, and can challenge exemptions they believe are improper.WEB, What is a 341(a) Meeting of Creditors?,weblink United States Bankruptcy Court, Northern District of California, United States Courts, 14 May 2017, live,weblink" title="web.archive.org/web/20170611070109weblink">weblink 11 June 2017,
An important feature applicable to all types of bankruptcy filings is the automatic stay.WEB, 11 U.S. Code Â§ 362 - Automatic stay,weblink Legal Information Institute, Cornell Law School, 19 October 2017, live,weblink 27 August 2017, The automatic stay means that the mere request for bankruptcy protection automatically halts most lawsuits, repossessions, foreclosures, evictions, garnishments, attachments, utility shut-offs, and debt collection activity.The most common types of personal bankruptcy for individuals are Chapter 7 and Chapter 13. Chapter 7, known as a "straight bankruptcy" involves the discharge of certain debts without repayment. Chapter 13, involves a plan of repayment of debts over a period of years. Whether a person qualifies for Chapter 7 or Chapter 13 is in part determined by income.WEB, Chapter 7 Basics,weblink United States Courts, Administrative Office of the U.S. Courts, 14 May 2017, live,weblink" title="web.archive.org/web/20160629140922weblink">weblink 29 June 2016, WEB, Chapter 7 Means Test Calculation,weblink United States Courts, Administrative Office of the U.S. Courts, 14 May 2017, live,weblink" title="web.archive.org/web/20170501105632weblink">weblink 1 May 2017, As many as 65% of all U.S. consumer bankruptcy filings are Chapter 7 cases.Before a consumer may obtain bankruptcy relief under either Chapter 7 or Chapter 13, the debtor is to undertake credit counselling with approved counseling agencies prior to filing a bankruptcy petition and to undertake education in personal financial management from approved agencies prior to being granted a discharge of debts under either Chapter 7 or Chapter 13. Some studies of the operation of the credit counseling requirement suggest that it provides little benefit to debtors who receive the counseling because the only realistic option for many is to seek relief under the Bankruptcy Code.Jones, Yvonne D. (2007). "Bankruptcy Reform: Value of Credit Counseling Requirement Is Not Clear (GAO-07-203)". Washington, D.C.: Government Accountability Office. p. (Highlights). {{LCCN|2007414394}}. {{OCLC|156274430}}.Corporations and other business forms normally file under Chapters 7 or 11.
Often called "straight bankruptcy" or "simple bankruptcy," a Chapter 7 bankruptcy potentially allows debtors to eliminate most or all of their debts over a period of as little as three or four months. In a typical consumer bankruptcy, the only debts that survive a Chapter 7 are student loans, child support obligations, some tax bills and criminal fines. Credit cards, pay day loans, personal loans, medical bills, and just about all other bills are discharged.In Chapter 7, a debtor surrenders non-exempt property to a bankruptcy trustee, who then liquidates the property and distributes the proceeds to the debtor's unsecured creditors. In exchange, the debtor is entitled to a discharge of some debt. However, the debtor is not granted a discharge if guilty of certain types of inappropriate behavior (e.g., concealing records relating to financial condition) and certain debts (e.g., spousal and child support and most student loans). Some taxes are not discharged even though the debtor is generally discharged from debt. Many individuals in financial distress own only exempt property (e.g., clothes, household goods, an older car, or the tools of their trade or profession) and do not have to surrender any property to the trustee. The amount of property that a debtor may exempt varies from state to state (as noted above, Virginia and Maryland have a $1,000 difference.) Chapter 7 relief is available only once in any eight-year period. Generally, the rights of secured creditors to their collateral continues, even though their debt is discharged. For example, absent some arrangement by a debtor to surrender a car or "reaffirm" a debt, the creditor with a security interest in the debtor's car may repossess the car even if the debt to the creditor is discharged.Ninety-one percent of U.S. individuals who petition for relief under Chapter 7 hire an attorney to file their petitions.WEB,weblink Archived copy, 2014-12-15, dead,weblink" title="web.archive.org/web/20141215234421weblink">weblink 2014-12-15, The typical cost of an attorney is $1,170.00. Alternatives to filing with an attorney are: filing pro se,WEB,weblink Bankruptcy Forms, uscourts.gov, 7 May 2018, live,weblink" title="web.archive.org/web/20150505070637weblink">weblink 5 May 2015, hiring a non-lawyer petition preparer,NEWS, Preparing Petitions: It Irks the Lawyers, But Is It Lawyering?, Adam Liptak,weblink The New York Times, August 13, 2002, live,weblink" title="web.archive.org/web/20170624170126weblink">weblink June 24, 2017, or using online software to generate the petition.To be eligible to file a consumer bankruptcy under Chapter 7, a debtor must qualify under a statutory "means test".NEWS,weblink Arizona Bankruptcy Means Test - Pew Law Center, Pew Law Center, en-US, 2017-01-08, live,weblink" title="web.archive.org/web/20170108190251weblink">weblink 2017-01-08, The means test was intended to make it more difficult for a significant number of financially distressed individual debtors whose debts are primarily consumer debts to qualify for relief under Chapter 7 of the Bankruptcy Code. The "means test" is employed in cases where an individual with primarily consumer debts has more than the average annual income for a household of equivalent size, computed over a 180-day period prior to filing. If the individual must "take" the "means test", their average monthly income over this 180-day period is reduced by a series of allowances for living expenses and secured debt payments in a very complex calculation that may or may not accurately reflect that individual's actual monthly budget. If the results of the means test show no disposable income (or in some cases a very small amount) then the individual qualifies for Chapter 7 relief. An individual who fails the means test will have their Chapter 7 case dismissed, or may have to convert the case to a Chapter 13 bankruptcy.If a debtor does not qualify for relief under Chapter 7 of the Bankruptcy Code, either because of the Means Test or because Chapter 7 does not provide a permanent solution to delinquent payments for secured debts, such as mortgages or vehicle loans, the debtor may still seek relief under Chapter 13 of the Code. A Chapter 13 plan often does not require repayment to general unsecured debts, such as credit cards or medical bills.Generally, a trustee sells most of the debtor's assets to pay off creditors. However, certain debtor assets will be protected to some extent by bankruptcy exemptions. These include Social Security payments, unemployment compensation, limited equity in a home, car, or truck, household goods and appliances, trade tools, and books. However, these exemptions vary from state to state.
In Chapter 11 bankruptcy, the debtor retains ownership and control of assets and is re-termed a debtor in possession (DIP).WEB, 11 U.S. Code Â§ 1101 - Definitions for this chapter,weblink Legal Information Institute, Cornell Law School, 19 October 2017, live,weblink 19 October 2017, The debtor in possession runs the day-to-day operations of the business while creditors and the debtor work with the Bankruptcy Court in order to negotiate and complete a plan. Upon meeting certain requirements (e.g., fairness among creditors, priority of certain creditors) creditors are permitted to vote on the proposed plan.WEB, 11 U.S. Code Â§ 1126 - Acceptance of plan,weblink Legal Information Institute, Cornell Law School, 19 October 2017, live,weblink 19 October 2017, If a plan is confirmed, the debtor continues to operate and pay debts under the terms of the confirmed plan. If a specified majority of creditors do not vote to confirm a plan, additional requirements may be imposed by the court in order to confirm the plan. Debtors filing for Chapter 11 protection a second time are known informally as "Chapter 22" filers.NEWS,weblink Twinkies Maker Preparing for Chapter 11 Filing, The Wall Street Journal, January 10, 2012, Mike, Spector, Julie, Jargon, live,weblink July 9, 2017,
In Chapter 13, debtors retain ownership and possession of all their assets, but must devote some portion of future income to repaying creditors, generally over three to five years.WEB, Larson, Aaron, What is Chapter 13 Bankruptcy,weblink ExpertLaw, 19 October 2017, 15 July 2016, live,weblink 19 October 2017, The amount of payment and period of the repayment plan depend upon a variety of factors, including the value of the debtor's property and the amount of a debtor's income and expenses.WEB, Chapter 13 - Bankruptcy Basics,weblink United States Courts, 19 October 2017, live,weblink" title="web.archive.org/web/20171020210719weblink">weblink 20 October 2017, Under this chapter, the debtor can propose a repayment plan in which to pay creditors over three to five years. If the monthly income is less than the state's median income, the plan is for three years, unless the court finds "just cause" to extend the plan for a longer period. If the debtor's monthly income is greater than the median income for individuals in the debtor's state, the plan must generally be for five years. A plan cannot exceed the five-year limit.Relief under Chapter 13 is available only to individuals with regular income whose debts do not exceed prescribed limits.WEB, 11 U.S. Code Â§ 109 - Who may be a debtor,weblink Legal Information Institute, Cornell Law School, 19 October 2017, live,weblink 19 October 2017, If the debtor is an individual or a sole proprietor, the debtor is allowed to file for a Chapter 13 bankruptcy to repay all or part of the debts. Secured creditors may be entitled to greater payment than unsecured creditors.In contrast to Chapter 7, the debtor in Chapter 13 may keep all property, whether or not exempt. If the plan appears feasible and if the debtor complies with all the other requirements, the bankruptcy court typically confirms the plan and the debtor and creditors are bound by its terms. Creditors have no say in the formulation of the plan, other than to object to it, if appropriate, on the grounds that it does not comply with one of the Code's statutory requirements.WEB, Federal Rules of Bankruptcy Procedure, Rule 3015. Filing, Objection to Confirmation, and Modification of a Plan in a Chapter 12 Family Farmer's Debt Adjustment or a Chapter 13 Individual's Debt Adjustment Case,weblink Legal Information Institute, Cornell Law School, 19 October 2017, live,weblink 19 October 2017, Generally, the debtor makes payments to a trustee who disburses the funds in accordance with the terms of the confirmed plan.When the debtor completes payments pursuant to the terms of the plan, the court formally grant the debtor a discharge of the debts provided for in the plan. However, if the debtor fails to make the agreed upon payments or fails to seek or gain court approval of a modified plan, a bankruptcy court will normally dismiss the case on the motion of the trustee.WEB, Federal Rules of Bankruptcy Procedure, Rule 1017. Dismissal or Conversion of Case; Suspension,weblink Legal Information Institute, Cornell Law School, 19 October 2017, live,weblink 20 October 2017, After a dismissal, creditors may resume pursuit of state law remedies to recover the unpaid debt.
{{Refimprove section|date=May 2007}}In 2004, the number of insolvencies reached record highs in many European countries. In France, company insolvencies rose by more than 4%, in Austria by more than 10%, and in Greece by more than 20%. The increase in the number of insolvencies, however, does not indicate the total financial impact of insolvencies in each country because there is no indication of the size of each case. An increase in the number of bankruptcy cases does not necessarily entail an increase in bad debt write-off rates for the economy as a whole.Bankruptcy statistics are also a trailing indicator. There is a time delay between financial difficulties and bankruptcy. In most cases, several months or even years pass between the financial problems and the start of bankruptcy proceedings. Legal, tax, and cultural issues may further distort bankruptcy figures, especially when comparing on an international basis. Two examples:
The insolvency numbers for private individuals also do not show the whole picture. Only a fraction of heavily indebted households file for insolvency. Two of the main reasons for this are the stigma of declaring themselves insolvent and the potential business disadvantage.Following the soar in insolvencies in the last decade, a number of European countries, such as France, Germany, Spain and Italy, began to revamp their bankruptcy laws in 2013. They modelled these new laws after the image of Chapter 11 of the U.S. Bankruptcy Code. Currently, the majority of insolvency cases have ended in liquidation in Europe rather than the businesses surviving the crisis. These new law models are meant to change this; lawmakers are hoping to turn bankruptcy into a chance for restructuring rather than a death sentence for the companies.NEWS,weblink Europe Builds Own Chapter 11, Ball, Deborah, 2013-04-05, Wall Street Journal, 0099-9660, 2016-11-22, live,weblink" title="web.archive.org/web/20161122222544weblink">weblink 2016-11-22,
Technically, states do not collapse directly due to a sovereign default event itself. However, the tumultuous events that follow may bring down the state, so in common language we do describe states as being bankrupted.Some examples of this are when a Korean state bankrupted Imperial China causing its destruction, or more specifically, when Chang'an's (Sui Dynasty) war with Pyongyang (Goguryeo) in 614 A.D. ended in the former's disintegration within 4 years, although the latter also seemingly entered into decline and fell some 56 years later."Koguryo". EncyclopÃ¦dia Britannica. Retrieved October 15, 2013. Another example is when the United States, with heavy financial backing from its allies (creditors), bankrupted the Soviet Union which led to the latter's demise.WEB,weblink The Collapse of the Soviet Union and Ronald Reagan, wais.stanford.edu, 7 May 2018, live,weblink" title="web.archive.org/web/20180322191321weblink">weblink 22 March 2018,
BOOK, Balleisen, Edward, Edward J. Balleisen, Navigating Failure: Bankruptcy and Commercial Society in Antebellum America, 2001, University of North Carolina Press, Chapel Hill, 0-8078-2600-6, 322,
BOOK, DePamphilis, Donald M., Mergers, Acquisitions, and Other Restructurings, 5th Edition, 2009, Elsevier, Academic Press, 978-0-12-374878-2,
WEB, MaÅ„ko, RafaÅ‚, Cross-border insolvency law in the EU,weblink Library Briefing, Library of the European Parliament, 21 February 2013,
BOOK, Sandage, Scott A., Born Losers: A History of Failure in America, 2006, Harvard University Press, Cambridge, Massachusetts, 0-674-02107-X, registration,weblink
{{Commons category|Bankruptcy}}
EB1911, Bankruptcy, 3, x,
weblink" title="web.archive.org/web/20081217025425weblink">U.S. Federal Bankruptcy Courts
weblink" title="web.archive.org/web/20081219112318weblink">Official U.S. Bankruptcy Statistics
weblink" title="web.archive.org/web/20090804091256weblink">US Courts Bankruptcy Law
weblink" title="web.archive.org/web/20090429115235weblink">Website of the Insolvency Service in the UK
- "bankruptcy" does not exist on GetWiki (yet)
- time: 10:12pm EDT - Thu, Sep 19 2019