Bankruptcy and bankruptcy protections are different terms with different meanings. Bankruptcy refers to legally declaring or recognizing the condition of the insolvency of a person or organization.
An individual or business is declared bankrupt when they are in debt, and there is no possible means of recovery. After filing for bankruptcy, all operations and transactions will cease. The court liquidates all assets of the debtor.
On the other hand, bankruptcy is a status given to a person or an organization that cannot pay back their debts in full. Bankruptcy protection is designed for debtors that have regular income to pay a specific portion of the debts through a repayment plan.
With bankruptcy protection, debtors can keep all their assets. This protection allows individuals or organizations to continue their operations.
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A. Boaz, Mechanical Engineer, Diploma in Mechanical Engineering, Atlanta, Georgia
Answered Nov 08, 2019
Bankruptcy refers to a state in which a person or an organization is no longer able to repay creditors, and this has been legally declared to the crucial parties according to the bankruptcy laws of that particular country. Bankruptcy is declared under chapter 7 of the bankruptcy code when the depth of debt becomes insurmountable, and any steps for recovery is impossible.
Then this calls for straightforward bankruptcy in which the court selects a trustee who evaluates the assets and liquidates the assets of the person or corporation. The resulting money is used to pay administrative expenses under chapter 13. Organizations will file for bankruptcy protection under chapter 11. The court does not liquidate the assets and requests that the company or individual come up with a reconstructing plan.
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C. Lucan, Copywriter, Literature Major, Baton Rouge, Louisiana
Answered Nov 04, 2019
When an individual, company, or organization can no longer repay their creditors, they file for bankruptcy. Bankruptcy has to be legally declared, in such a fashion that satisfies the bankruptcy laws of their particular country. Bankruptcy is declared by chapter 7 of the bankruptcy code when it is stated that the person or organization is deep in debt, and recuperation is impossible. When it is impossible, this then calls for a straightforward bankruptcy in which the court appoints a trustee who evaluates and liquidates the assets of the person or corporation.
The money is then used to settle with the creditors. Bankruptcy protection is when the court, instead of liquidating the assets. The court also will request the company or person to come up with a restructuring plan. It also earmarks a committee from its side to protect other parties' interests, such as creditors and shareholders, in the case of organizations. Bankruptcy protection falls under chapter 11.