LAW 122 Chapter 24: Chapter 24- Dealing with bankruptcy and Insolvency.docx
8 Apr 2015
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Insolvent- when their debts exceed their assets, or they cannot meet their liabilities as they come due. Bankrupt- a person becomes bankrupt by assigning themselves into bankruptcy or as a result of a creditor applying to a court for a bankruptcy order against them. **you are not bankrupt, unless a court says you are bankrupt. Stay- is a suspension of legal proceedings against a debtor. Liquidation- is the sale of the debtor"s assets in return for money, which is liquid and can be distributed to the bankrupt"s creditors. Discharge- is the release of a debtor from bankruptcy status. Bankruptcy is one way to provide debtors who are individuals a fresh start. Corporate and consumer bankrupts will usually find it difficult to re-establish credit. Bankruptcy law tries to balance rehabilitation of the debtor with protecting the legitimate interests of creditors in getting paid.
