Question

This discussion will assess how well you understand the concept of bankruptcy. begin ny researching a personal and corporate bankruptcy case then decide: briefly describe each of the bankruptcy chapters. from there map them as personal or corporate remedies. what are some similarities and differences between personal and corporate bankruptcy law?

Answer 1

Bankruptcy is a legal process overseen by federal bankruptcy courts. It's designed to help individuals and businesses eliminate all or part of their debt or to help them repay a portion of what they owe.

Bankruptcy may help you get relief from your debt, but it's important to understand that declaring bankruptcy has a serious, long-term effect on your credit. Bankruptcy will remain on your credit report for 7-10 years, affecting your ability to open credit card accounts and get approved for loans with favorable rates.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, also known as "straight bankruptcy," is what most people probably think of when they're considering filing for bankruptcy.

Under this type of bankruptcy, you'll be required to allow a federal court trustee to supervise the sale of any assets that aren't exempt (cars, work-related tools and basic household furnishings may be exempt). Money from the sale goes toward paying your creditors. The balance of what you owe is eliminated after the bankruptcy is discharged. Chapter 7 bankruptcy can't get you out of certain kinds of debts. You'll still have to pay court-ordered alimony and child support, taxes, and student loans.

The consequences of a Chapter 7 bankruptcy are significant: you will likely lose property, and the negative bankruptcy information will remain on your credit report for ten years after the filing date. Should you get into debt again, you won't be able to file again for bankruptcy under this chapter for eight years.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy works slightly differently, allowing you to keep your property in exchange for partially or completely repaying your debt. The bankruptcy court and your attorney will negotiate a three- to five-year repayment plan. Depending on what's negotiated, you may agree to repay all or part of your debt during that time period. When you've completed the agreed repayment plan, your debt is discharged, even if you only repaid part of the amount you originally owed.

While any type of bankruptcy negatively affects your credit, a Chapter 13 may be a more favorable option. Because you repay some (or all) of your debt, you may be able to retain some assets. What's more, a Chapter 13 bankruptcy will cycle off your credit report after seven years, and you could file again under this chapter in as little as two years

Consequences of Bankruptcy

Perhaps the most well-known consequence of bankruptcy is the loss of property. As previously noted, both types of bankruptcy proceedings can require you to give up possessions for sale in order to repay creditors. Under certain circumstances, bankruptcy can mean losing real estate, vehicles, jewelry, antique furnishings and other types of possessions.

Your bankruptcy can also affect others financially. For example, if your parents co-signed an auto loan for you, they could still be held responsible for at least some of that debt if you file for bankruptcy.

Finally, bankruptcy damages your credit. Bankruptcies are considered negative information on your credit report, and can affect how future lenders view you. Seeing a bankruptcy on your credit file may prompt creditors to decline extending you credit or to offer you higher interest rates and less favorable terms if they do decide to give you credit.

Depending on the type of bankruptcy you file, the negative information can appear on your credit report for up to a decade. Discharged accounts will have their status updated to reflect that they've been discharged, and this information will also appear on your credit report. Negative information on a credit report is a factor that can harm your credit score.

Remedies of Bankruptcy

Some bankruptcy alternatives you might consider are:

• Seek help from a government-approved credit counselor or debt management plan. A counselor can work with your creditors to help arrange a workable plan for repaying what you owe.
• Take out a debt consolidation loan. These types of loans can aggregate multiple high-interest, costlier debt into a single, lower-interest loan. Research debt consolidation loans to see if consolidation can lower the total amount you pay and make your debt more manageable.
• Approach your creditors and see if they're willing to agree to a more manageable repayment plan. Defaulting on your debt is not something your creditors want to see happen to you, either, so they may be willing to work with you to arrange a more achievable repayment plan. Settling your debt will have a negative effect on your credit scores.

General Differences Between Business and Personal Bankruptcy

One of the big differences between personal and business bankruptcy is the means test. Individuals have to participate in one to determine if they are eligible for a Chapter 7 (a "liquidation" of debtor's assets) or a Chapter 13 (a "reorganization" plan), while businesses do not have to prove this for a Chapter 11 filing.

Businesses can also cancel contracts with creditors if it would be financially favorable to both parties to do so, while individuals do not get that option for student loan debt or other types of debt exempt from bankruptcy.

Answer 2

Personal Bankruptcy Case:

One example of a personal bankruptcy case is the Chapter 7 bankruptcy filing by former NFL quarterback Michael Vick in 2008. Vick filed for bankruptcy after being convicted of dogfighting charges and sentenced to prison.

Corporate Bankruptcy Case:

One example of a corporate bankruptcy case is the Chapter 11 bankruptcy filing by the department store chain Sears Holdings Corporation in 2018. Sears filed for bankruptcy after struggling with declining sales and mounting debt.

Bankruptcy Chapters:

There are several chapters of the U.S. Bankruptcy Code that are commonly used in personal and corporate bankruptcy cases. These include:

Chapter 7: Also known as a "liquidation" bankruptcy, Chapter 7 is used by individuals and businesses to discharge most or all of their debts by selling off assets to pay creditors. This is primarily a personal bankruptcy remedy, although some small businesses can also use it.

Chapter 11: This chapter is used primarily by businesses, including corporations and partnerships, to restructure their debts and operations in order to emerge from bankruptcy as a viable entity. It allows for the creation of a reorganization plan that must be approved by creditors and the bankruptcy court.

Chapter 13: This chapter is a personal bankruptcy remedy that allows individuals with regular income to restructure their debts and repay them over a period of three to five years. This is often used by individuals who do not qualify for Chapter 7 bankruptcy or who want to keep certain assets, such as their home or car.

Similarities and Differences:

While personal and corporate bankruptcy cases share some similarities, there are also significant differences between the two. Some similarities include:

Both personal and corporate bankruptcy cases are subject to the same federal bankruptcy laws and procedures.

In both types of cases, the bankruptcy court will appoint a trustee to oversee the process and ensure that creditors are paid as much as possible.

Bankruptcy can provide relief from debts, collection efforts, and lawsuits.

However, there are also significant differences between personal and corporate bankruptcy cases, such as:

The types of bankruptcy chapters available: Personal bankruptcy cases are typically filed under either Chapter 7 or Chapter 13, while corporate bankruptcy cases are usually filed under Chapter 11.

The goals of the bankruptcy: In a personal bankruptcy case, the goal is often to discharge as much debt as possible and provide the individual with a fresh start. In a corporate bankruptcy case, the goal is to restructure the business and emerge as a viable entity.

The types of debts involved: Personal bankruptcy cases often involve consumer debts such as credit cards, medical bills, and personal loans, while corporate bankruptcy cases involve business debts such as loans, bonds, and trade debt.

The impact on the individual or business: Personal bankruptcy can have a significant impact on an individual's credit score and ability to obtain credit in the future. In a corporate bankruptcy case, the impact on the business can be much broader, affecting employees, shareholders, and customers.