A Simple Explanation Of Bankruptcy
by Adriana Noton
Let's begin with a definition of bankruptcy. When a private citizen or commercial company can no longer meet their outstanding debts, they are said to be bankrupt. This may come about voluntarily or involuntarily.
Nobody chooses the involuntary way as it occurs when a creditor is forced to bring legal action to recover all or part of the value of the goods he supplied. This kind of action can only be used against those engaged in business, and not against private citizens who are not. The other type of bankruptcy, voluntary, happens when an individual or business states that they are no longer in a position to pay their debts.
The reign of King Henry VIII of England, during the sixteenth century, saw the seeds of modern bankruptcy being sown. An act of parliament was passed allowing a creditor to appropriate the possessions of an indebted trader. Furthermore, the trader could be thrown into jail until any outstanding amounts were paid off by his family.
However, as time passed, the debtors lot, while not being great, did improve. By the early years of the nineteenth century, they were sometimes freed from prison and their debts discharged. Even so, creditors continued to rule the roost and it was still very common for indebted traders to have their goods and chattels seized, and go to jail.
Since those early days, the law has evolved. The complexities of modern life, and business in particular, have necessitated many changes. Nowadays, there is a greater emphasis on the restructuring of businesses than on the elimination of insolvent parties. This is seen to be a good practice, not only in financial and business terms, but also for the well being of society as a whole.
It is probably fair to say that no two countries have exactly the same laws. Each one has developed at its own pace and within its own culture, giving rise to its current legal state. For this reason, it is not a good idea to make generalizations regarding what is and what is not permissible or acceptable when an entity or person falls on hard times. Suffice it to say that each country has its own mechanisms for dealing with such problems.
It is hard to imagine anyone deliberately becoming bankrupt. It is true, though, that it can happen to anyone and can occur for a variety of reasons. These can range from sheer bad luck, through poor decision making, to negligence. Legal penalties may not be as severe as they used to be, but even so, declaring oneself bankrupt is seen as a last throw of the dice.
The life of a bankrupt may be subject to all kinds of restriction until the charge has been lifted. A person will lose control of their assets and be subject to future credit restrictions. Furthermore, the holding of certain public positions may no longer be accessible. And added to that is the social stigma as a result of the bankruptcy being advertised. Although, of course, this may vary from society to society.
On a more upbeat note, everything isn't doom an gloom. A bankruptcy york region is now free of his debts. This can bring considerable peace of mind while he is now able to plan for the future.
Nobody chooses the involuntary way as it occurs when a creditor is forced to bring legal action to recover all or part of the value of the goods he supplied. This kind of action can only be used against those engaged in business, and not against private citizens who are not. The other type of bankruptcy, voluntary, happens when an individual or business states that they are no longer in a position to pay their debts.
The reign of King Henry VIII of England, during the sixteenth century, saw the seeds of modern bankruptcy being sown. An act of parliament was passed allowing a creditor to appropriate the possessions of an indebted trader. Furthermore, the trader could be thrown into jail until any outstanding amounts were paid off by his family.
However, as time passed, the debtors lot, while not being great, did improve. By the early years of the nineteenth century, they were sometimes freed from prison and their debts discharged. Even so, creditors continued to rule the roost and it was still very common for indebted traders to have their goods and chattels seized, and go to jail.
Since those early days, the law has evolved. The complexities of modern life, and business in particular, have necessitated many changes. Nowadays, there is a greater emphasis on the restructuring of businesses than on the elimination of insolvent parties. This is seen to be a good practice, not only in financial and business terms, but also for the well being of society as a whole.
It is probably fair to say that no two countries have exactly the same laws. Each one has developed at its own pace and within its own culture, giving rise to its current legal state. For this reason, it is not a good idea to make generalizations regarding what is and what is not permissible or acceptable when an entity or person falls on hard times. Suffice it to say that each country has its own mechanisms for dealing with such problems.
It is hard to imagine anyone deliberately becoming bankrupt. It is true, though, that it can happen to anyone and can occur for a variety of reasons. These can range from sheer bad luck, through poor decision making, to negligence. Legal penalties may not be as severe as they used to be, but even so, declaring oneself bankrupt is seen as a last throw of the dice.
The life of a bankrupt may be subject to all kinds of restriction until the charge has been lifted. A person will lose control of their assets and be subject to future credit restrictions. Furthermore, the holding of certain public positions may no longer be accessible. And added to that is the social stigma as a result of the bankruptcy being advertised. Although, of course, this may vary from society to society.
On a more upbeat note, everything isn't doom an gloom. A bankruptcy york region is now free of his debts. This can bring considerable peace of mind while he is now able to plan for the future.
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