What is Bankruptcy?

Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay its creditors. Creditors may file a bankruptcy petition against a debtor ("involuntary bankruptcy") in an effort to recoup a portion of what they are owed or initiate a restructuring. In the majority of cases, however, bankruptcy is initiated by the debtor.

At first when a company got bankrupt it was thought of as a disgrace and the failure on the part of the business associates that were running the business.

However soon the bankruptcy was used more like a weapon, companies that failed to give their debts, showed that their accounts were nil and the company was bankrupt. This meant that the people to whom the money had to be returned would get nothing. Furthermore as the previous laws state, if the firm is registered as a corporation the amount of payments that will have to be returned to the lenders, will be only the price of all the assets of the corporation and not the personal belonging of the head of the firm.

Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA)

This acts has been worked upon for a long time, however the policies of all the countries differs when it comes to the bankruptcy laws, however most of them agree to the BAPCPA. The biggest thing that was enacted was regarding the debtors, and the acts says that if a debtor has filed for bankruptcy, he will have to wait for 8 years to file another request for bankruption.