MGMT 108 Study Guide - Final Guide: Unsecured Creditor, Automatic Stay, Chapter 7, Title 11, United States Code
Document Summary
Bankruptcy is governed by the federal bankruptcy code. We are only looking at chapter 7 bankruptcy (personal liquidation) but here is also chapter 13 for individual repayment and chapter 11 for reorganization for big companies. The person first files a bankruptcy petition which can be voluntary (filed by the debtor) or involuntary (filed by the creditors) A debtor can be an individual, a partnership, or a corporation under a chapter 7. Within 6 months prior to filing, the individual debtor has to have received credit counseling. The goal of filing for bankruptcy is to get out of general debt (aka get a discharge) (cid:1) (cid:1) Instantly after filing, an automatic stay goes into effect which provides instant protection for debtors. Creditors are frozen by the automatic stay and cannot pursue their claims by any outside means once a bankruptcy is filed. For example, the automatic stay can stop a foreclosure on a debtor"s house.
