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Bankruptcy In Financial Dealings

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Bankruptcy in Financial Dealings
According to Article one, section eight; clause four of the American constitution, an
individual is permitted to file for bankruptcy (Gonzalez 120). This is in a case where an
individual has more debts than the assets that they possess. Thus, Bankruptcy is a state of
insolvency, which in financial dealings is a legal procedure for dealing with debt for businesses
and individuals. Laws have been postulated to govern duties and rights of debtors when they
cannot afford to pay their creditors; these laws are called Bankruptcy laws ("Costs Of
Bankruptcy" 101). This laws exposit the assets which can and cannot be used to pay creditors
when the debtor cannot pay off his debts.
Similarly, chapters 7, 9,11,12,13, and 15 of the American constitutions’ bankruptcy code
which explain the types of action to be undertaken in the case of bankruptcy (Gonzalez 136).
There are three main types of bankruptcy actions: liquidations, reorganizations, and cross-border
insolvency, which will be juxtaposed with the above codes as they authorize them. Chapter 7 is a
common type of bankruptcy action that authorizes for liquidations (Gonzalez 138). This code
provides for a court of law to appoint a trustee. The role of the trustee is to collect all the non-
exempted properties of a debtor, sell them and allocate the earnings from the sale among the
creditors. Therefore, Chapter 7 spells the properties that are entitled to be liquidated to pay off
debts.

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On the other hand, reorganizations are actions of bankruptcy filed under Chapter 9, 11,
12, and 13 of the American constitutions bankruptcy code. These codes are responsible for
generating plans for which debtors can keep their property and instead pay off their creditors
using future earnings (Gonzalez 139). Chapter 9 spells the plans for counties and cities; Chapter
11 is for business entities, section 12 is for fishers and family farms, and individual filings are
protected under chapter 13 (Gonzalez 140). Finally, cross-border insolvencies are consecrated in
chapter 15 (Gonzalez 150), which governs actions that involve foreign companies indebted to
creditors based in the US.

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Surname: 1 Name: Tutor’s Name: Course: Date: Bankruptcy in Financial Dealings According to Article one, section eight; clause four of the American constitution, an individual is permitted to file for bankruptcy (Gonzalez 120). This is in a case where an individual has more debts than the assets that they possess. Thus, Bankruptcy is a state of insolvency, which in financial dealings is a legal procedure for dealing with debt for businesses and individuals. Laws have been postulated to govern duties and rights of debtors when they cannot afford to pay their creditors; these laws are called Bankruptcy laws ("Costs Of Bankruptcy" 101). This laws exposit the assets which can and cannot be used to pay creditors when the debtor cannot pay off his debts. Similarly, chapters 7, 9,11,12,13, and 15 of the American constitutions’ bankruptcy code which explain the types of action to be undertak ...
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