Choose The Right Synonym For Bankrupt
deplete, drain, exhaust, impoverish, bankrupt mean to deprive of something essential to existence or potency. deplete implies a reduction in number or quantity so as to endanger the ability to function. depleting our natural resourcesdrain implies a gradual withdrawal and ultimate deprivation of what is necessary to an existence. personal tragedy had drained him of all spirit exhaust stresses a complete emptying. her lecture exhausted the subject impoverish suggests a deprivation of something essential to richness or productiveness. impoverished soilbankrupt suggests impoverishment to the point of imminent collapse. war had bankrupted the nation of resources
Feb Origin Of The Word Bankruptcy
The word bankruptcy is derived from two Latin words. The word bancus means table or bench and ruptus means broken. In the early 1800s people used to come together in common areas such as the market place. The open air markets were the original green mall with natural lighting and air conditioning. Merchants would set up their businesses either on tables or benches throughout these common areas so that shoppers could purchase the goods or services.
When the merchant could no longer afford to stay in business his table/bench was broken to symbolize that he was no longer welcome do business with the other merchants. It was not uncommon for merchants to operate off a line of credit and your word of honor. However, when the debt would carry over too long, the suppliers would cut the merchant off until the debt was paid in full. The merchant in those times could either pay his debt in trade, money or work off his debt. Either way if the merchant wanted to sell his wares again he would have to pay his debt.
Remember that knowledge is power and the more knowledge you obtain about bankruptcy the more power you will to understand how the bankruptcy system works.
Modern Law And Debt Restructuring
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. 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 . 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 , discharge is conditioned to a lesser extent. The spectrum is broad in the EU, with the UK coming closest to the US system . The Other Member States do not provide the option of a debt discharge. Spain, for example, passed a bankruptcy law in 2003 which provides for debt settlement plans that can result in a reduction of the debt or an extension of the payment period of maximally five years , but it does not foresee debt discharge.
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Recent Developments In Federal Bankruptcy Law
Brought about by a surge in bankruptcy filings and public concern over inequities in the system, the Bankruptcy Reform Act of 1994 is one illustration of Congress’s continuing effort to protect the rights of debtors and creditors. Consistent with Congress’s goal of promoting reorganization over liquidation, the legislation made it easier for individual debtors to qualify for chapter 13 reorganization. Previously, individuals with more than $450,000 in debt were not eligible to file under chapter 13, and instead were forced to reorganize under the more complex and expensive chapter 11 or to liquidate under chapter 7. The 1994 amendments allow debtors with up to $1 million in outstanding financial obligations to reorganize under chapter 13.
The new law helps creditors by prohibiting the discharge of credit card debts used to pay federal taxes, or those exceeding $1,000 incurred within sixty days before the bankruptcy filing. In this way, the law deters debtors from shopping sprees and other abuses just before filing for bankruptcy. Creditors also benefit from new provisions that set forth additional grounds for obtaining relief from the automatic stay, and require speedier adjudication of requests for relief from the stay.
Anderson, Nick. 2003. “House Passes Bankruptcy Reform Bill For the 7th Time.”Los Angeles Times .
Reid, Linda. 2001.”Bankruptcy Reform Legislation”Arkansas Lawyer .
The Next Federal Bankruptcy Law
After the financial panic of 1837, Congress passed another bankruptcy law, called the Bankruptcy Act of 1841. For the first time, this bankruptcy law permitted debtors to file their own voluntary bankruptcies without a creditor to initiate it. This was a revolution in insolvency law. In fact, a debtor could file for bankruptcy and receive a discharge of debt. In addition, any individual could be a debtor, not just a merchant as under the 1800 law. The power to grant the discharge and judge other matters relating to bankruptcy rested with the United States District Courts.
Unfortunately, however, creditors viewed the 1841 law as providing few payments to creditors and discharging too much debt for too many debtors. Accordingly, the 1841 law was repealed in 1843.
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The History Of Credit & Debt Bankruptcy
Bankruptcy has been around for over four hundred years. However, what we assume to be bankruptcy, the elimination of debts, is not what bankruptcy started as intended to become.
The word bankruptcy comes from bancus, the tradesmans counter, and ruptus, broken, denoting one whose place of business was broken or gone. Under pre-English bankruptcy laws, Rome, under the Caesars, had debt collection laws, a practice of appointing trustees after the marketplace bench was either broken or removed as a declaration of a merchants bankruptcy. The trustee auctioned off the bankrupt property to the bidder who would pay the most to creditors. The trustee was appointed by the creditors or by a magistrate if creditors could not agree. The trustee was called the curator bonorum, meaning protector orcaretaker of the property, which he held for the benefit of the creditors.
The first English bankruptcy law was passed in England in 1570 during the reign of Henry VIII. It is the foundation of the American bankruptcy laws. While some historians claim a statute passed in 1542 was the first bankruptcy law, it was not. The 1542 statute was designed to prevent fraud on creditors. Under that statute, the debtor was summoned to appear before a Chancellor and, on the creditors demand, to be examined under oath. If the debtor failed to surrender his possessions to pay his debt, off to debtors prison he went.
This Legislation Culminated With The Chandler Act Of 1938 Which Included Substantial Provisions For Reorganization Of Businesses
This legislation culminated with the Chandler Act of 1938, which included substantial provisions for reorganization of businesses. Also in 1938, Congress enacted Section 60e of the Bankruptcy Act and created a single and separate fund concept intended to minimize losses to customers by giving them priority over claims of general creditors. The securities industry saw significant turbulence in 1969 and 1970, leading to voluntary liquidations, mergers, receiverships and bankruptcies of a substantial number of brokerage houses. In reaction to this situation, Congress enacted the Securities Investor Protection Act of 1970 in an attempt to quell the filings, restore investor confidence and upgrade financial responsibility requirements for registered brokers and dealers.
THE BANKRUPTCY REFORM ACT
Courses Of Action For The Bankrupt
Bankruptcy is the legally declared inability, or impairment of ability, of an individual or organization to pay their creditors. In most cases personal bankruptcy is initiated by the bankrupt individual. Bankruptcy is a legal process that discharges most debts, but has the disadvantage of making it more difficult for an individual to borrow in the future. To avoid the negative impacts of personal bankruptcy, individuals in debt have a number of bankruptcy alternatives. These include taking no action, managing their own money, negotiating with creditors, consolidating debt, or entering into a formal proposal with their creditors.
Debt is a result of spending more than one’s income in a given period. To reduce debt, the most obvious solution is to reduce monthly spending to allow extra cash flow to service debt. This can be done by creating a personal budget and analyzing expenses to find areas to reduce expenses. Most people, when reviewing a written list of their monthly expenses, can find ways to reduce expenses.
First Federal Bankruptcy Law
In 1800, Congress passed the first federal law relating to bankruptcy, called the Bankruptcy Act of 1800. Similar to many state bankruptcy systems at the time, the Bankruptcy Act of 1800 was very creditor-oriented and only permitted involuntary bankruptcies of merchant debtors. There were no provisions for individuals to file on their own. Some crafty debtors figured out that they could ask a friendly creditor to initiate the bankruptcy case. However, due to many complaints of corruption and favoritism, the law was repealed just three years later. The states continued to run various bankruptcy systems in the absence of federal law.
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Advantages And Disadvantages Of Bankruptcy
If you’re trying to decide whether you should file for bankruptcy, your credit is probably already damaged. But it’s worth noting that a Chapter 7 filing will stay on your for 10 years, while a Chapter 13 will remain there for seven. Any creditors or lenders you apply to for new debt will see the discharge on your report, which can prevent you from getting any credit.
What Is The Adjective For Bankruptcy
Included below are past participle and present participle forms for the verb bankrupt which may be used as adjectives within certain contexts.
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Chapter 7 Bankruptcy 101
Both individuals and businesses are allowed to file for Chapter 7 bankruptcy. These proceedings typically last between three and six months.
In a Chapter 7 bankruptcy proceeding, some of your property may be seized and sold to pay off some or all of your debts. This is known as “liquidation of property.”
However, as a benefit of this type of bankruptcy proceeding, any unsecured debts will be wiped out. In addition, there are certain types of property that cannot be sold in order to pay off your debts, such as the furniture in your home, your car, and your clothes.
Secured debts are treated differently than unsecured debts in a Chapter 7 bankruptcy proceeding. In a Chapter 7 bankruptcy proceeding, you have to make a choice between allowing the creditor to repossess the property that secures the debt, continuing to make payments on your debt to the creditor, or paying the creditor a sum equal to the replacement value of the property that secures the debt. In addition, some types of secured debts can be wiped out during a Chapter 7 bankruptcy proceeding.
Before you can file for Chapter 7 bankruptcy, you must be able to show that you are eligible to file for Chapter 7. To be eligible for Chapter 7, you cannot make enough money to be able to fund a Chapter 13 bankruptcy repayment plan. There are other requirements to be eligible to file for Chapter7 bankruptcy.
What Is Chapter 11
Chapter 11 is a specific section of the US Bankruptcy Code. It permits the reorganization of assets and debts, under court supervision, of an insolvent corporation. Individuals can also seek relief through chapter 11. Chapter 11 also establishes a schedule of payment for debts owed.
The time it takes for debtors to come out of chapter 11 varies. Depending on the scale of the bankruptcy, it could be a few months or years for a company or individual to emerge from chapter 11.
The management of a company in chapter 11 is often not fired. This detail alone often enrages critics who say that the chapter 11 allows for too much leniency. Chapter 11 should not be confused with Chapter XI of the United Nations Charter. This is a declaration regarding non-self-governing territories.
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On December 1 2007 Amendments To The Federal Rules Of Bankruptcy Procedure Became Effective Following April 2007 Us Supreme Court Approval
On December 1, 2007, amendments to the Federal Rules of Bankruptcy Procedure became effective following April 2007 U.S. Supreme Court approval. Among other changes the amendments make the following significant adjustments: First, there is an amendment to Rule 3007, which is related to form and notice of a claim objection hearing. The new rule institutes formatting standards and the restriction of omnibus objections. Second, the amendment provides clearer disclosure as it relates to cash collateral and debtor-in-possession financing usage. This comes specifically in the form of changes to Rule 4001, which relates to motions and stipulations for cash collateral and D.I.P. financing. Third, the amendment offers the addition of Rule 6003, which provides certain limitations on first day orders. Fourth, the changes further amend Rule 6006, which relates to the rejection of executory contracts and unexpired leases, to provide greater restrictions on omnibus motions. Fifth, these recent amendments adjust Rule 1014, allowing the Court to order a change in venue without separate motions filed by the Debtor or other interested parties.
THE FINANCIAL INSTITUTION BANKRUPTCY ACT
Examples Of Major Bankruptcies In Recent Years
- Lehman Brothers Holdings Inc. was a global financial services firm that was involved in investment banking, research and trading, investment management, private equity, and private banking. The company went under on September 15, 2008. Assets were worth $600 billion.
- On September 26, 2008, Washington Mutual Inc. filed for bankruptcy. All assets and most of the liabilities were assumed by JPMorgan Chase. Assets were worth $327.9 billion.
- General Motors Company, generally called GM, is a U.S.-based automaker. By sales, GM ranked as the largest in the U.S. and the worlds second-largest in 2008. On the Fortune Global 500, GM posted the third-highest 2008 global revenue among automakers. GM filed for bankruptcy on June 1, 2009. The filing reported $82.29 billion in assets and $172.81 billion in debt.
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Gambling With Bankruptcy Exemptions
In bankruptcy cases, individual debtors have the privilege of retaining certain amounts or types of property that otherwise would be subject to liquidation or seizure by creditors in order to satisfy debts. Laws protecting these forms of property are called exemptions.
Consistent with the goal of allowing the debtor a “fresh start,” exemptions in bankruptcy cases help ensure that the debtor, upon emerging from bankruptcy, is not destitute. Exemption statutes generally permit the debtor to keep such things as a home, a car, and personal goods like clothes. Although exemptions inhibit the creditor’s ability to collect debts, they relieve the state of the burden of providing the debtor’s basic needs.
The bankruptcy code provides a list of uniform exemptions but also allows individual states to opt out of these exemptions . Thus, the types and amounts of property exemptions differ greatly and depend upon the debtor’s state of residence.
Despite the broad variance among states when it comes to bankruptcy exemptions, critics charge that even the uniform federal system can be grossly unfair. For example, assume two debtors, Arlene and Ben, each have estates valued at $28,000. Arlene, a dentist, has $15,000 of in her home. She has $8,000 worth of furniture and household goods. Her car is worth $4,000, and she owns dental tools valued at $1,000.
Epstein, David G. 2002. Bankruptcy and Related Law in a Nutshell. St. Paul, Minn.: West Group.
Chapter 11 Bankruptcy 101
Chapter 11 bankruptcy proceedings are normally used by struggling businesses as a way to get their affairs in order and pay off their debts.
In addition, some individuals also file for Chapter 11 bankruptcy when they are not eligible for Chapter 13 bankruptcy or own large amounts of non-exempt property . However, Chapter 11 can be much more expensive and time-consuming when compared to Chapter 13.
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Being Discharged From Bankruptcy
When a debtor receives a discharge order, they are no longer legally required to pay the debts specified in the order. What’s more, any creditor listed on the discharge order cannot legally undertake any type of collection activity against the debtor once the discharge order is in force.
However, not all debts qualify to be discharged. Some of these include tax claims, anything that was not listed by the debtor, child support or alimony payments, personal injury debts, and debts to the government. In addition, any secured creditor can still enforce a lien against property owned by the debtor, provided that the lien is still valid.
Debtors do not necessarily have the right to a discharge. When a petition for bankruptcy has been filed in court, creditors receive a notice and can object if they choose to do so. If they do, they will need to file a complaint in court before the deadline. This leads to the filing of an adversary proceeding to recover money owed or enforce a lien.
The discharge from Chapter 7 is usually granted about four months after the debtor files to petition for bankruptcy. For any other type of bankruptcy, the discharge can occur when it becomes practical.