Bankruptcy

Bela Candelaria

What Is It?

When someone can't pay back their debts
Debtor- person who borrows money or owes money
Creditor- person that is owed the money or lent the money

Where Did It Originate?

In Ancient Greece
-simple solution
-if debtor cannot pay debt, becomes debt slave to creditor.
-Have to pay off in labor

Mid-Evil Europe
-Debtors prison: throw you in jail and not coming out until family pays off debts

Types of Bankruptcy

Chapter 7

Straight Bankruptcy:
-Go to courts and file for bankruptcy
-They take your assets and split them between creditors
-You owe nothing after this
-Also take all money and valuables and sell to creditors
-Stays on credit report for ten years

Chapter 13

Reorganization:
-Ask creditors to reorganize a plan to be able to realistically pay back in 3-5 years
-Stays on credit report for ten years