Bankruptcy system – resolve effects of financial failure
Composition agreement – an agreement between debtor and creditors for the repayment of debt Debt collection- collects assets and distributes proceeds to the multiple creditors. Debtor relief – legal relief from debt
Discharge- forgiving the debt.
Exemption – is property that a debtor may protect from seizure by creditors. Assignment for the benefit of creditors- takes place when a debtor, assigns its assets to a third party in trust to sell the assets and to apply the proceeds to the payment of the creditors’ claims. Bankruptcy alternatives – a creditor seeking other alternatives to collect a debt from the debtor Bankruptcy code- is a large self contained legal, economic, and accounting system designed to reconcile all financial affairs of a debtor as they exist at the time of filing. Composition agreement- a written document defining all of the terms of repayment and signed by all the involved parties Creditors- are the entities to whom the debts are owed
Debtor- is the entity that is bankrupt and owes the debt
Liquidation-all debtor’s nonexempt assets are sold
Reorganization- goal to satisfy debts while reserving the business Trustee- is an independent third party who liquidates the estate’s assets and distributes the dividends to the creditors. Discussion Questions
1. Why do individuals or businesses seek bankruptcy relief? a. To seek help when individuals have financial crisis in life, such as, unemployment, illness, and unforeseen disaster. Obsolete procedurals, failure to compete in industry, mismanagement occurs, or due to poor economy.
2. What distinguishes debtor relief from debt collection in a bankruptcy system? b. Bankruptcy system is a way to resolve financial issues to help get to a debt relief solution.
3. How does the concept of debtor relief in modern American bankruptcy law compare with debtor relief found in England before...