Bankruptcy
The term is often described as having originated in Renaissance Italy, where there allegedly existed the tradition of smashing a banker's bench if he defaulted on payment.
If a man owed and he could not pay, he and his wife, children or servants were forced into "debt slavery" until the creditor recouped losses through their physical labour.
However, servants of the debtor could be retained beyond that deadline by the creditor and were often forced to serve their new lord for a lifetime, usually under significantly harsher conditions.
An exception to this rule was Athens, which by the laws of Solon forbade enslavement for debt; as a consequence, most Athenian slaves were foreigners (Greek or otherwise).
According to al-Maqrizi, the Yassa of Genghis Khan contained a provision that mandated the death penalty for anyone who became bankrupt three times.
According to Kenneth S. Rogoff, "Although the development of international capital markets was quite limited prior to 1800, we nevertheless catalog the various defaults of France, Portugal, Prussia, Spain, and the early Italian city-states.
In most EU member states, debt discharge is conditioned by a partial payment obligation and by a number of requirements concerning the debtor's behavior.
In some countries, such as the United Kingdom, bankruptcy is limited to individuals; other forms of insolvency proceedings (such as liquidation and administration) are applied to companies.
[13][14] In Argentina, the national Act "24.522 de Concursos y Quiebras" regulates Bankruptcy and Reorganization of individuals and companies; public entities are not included.
Legal and natural persons, including individual entrepreneurs, who have an indisputable payment obligation exceeding 60 days and amounting to more than one million AMD can be declared bankrupt.
[20] A person can also seek to have themselves declared bankrupt for any amount of debt by lodging a debtor's petition with the "Official Receiver",[21] which is the Australian Financial Security Authority (AFSA).
[22] All bankrupts must lodge a Statement of Affairs document, also known as a Bankruptcy Form, with AFSA, which includes important information about their assets and liabilities.
If a house, including the main residence, or car is above a certain value, a third party can buy the interest from the estate in order for the bankrupt to utilise the asset.
The goal is to overcome the business crisis situation of the debtor in order to allow the continuation of the producer, the employment of workers and the interests of creditors, leading, thus, to preserving company, its corporate function and develop economic activity.
The trustee calls the first meeting of creditors for the following purposes: In Canada, a person can file a consumer proposal as an alternative to bankruptcy.
A typical proposal would involve a debtor making monthly payments for a maximum of five years, with the funds distributed to their creditors.
Canada does, however, have laws that allow for businesses to restructure and emerge later with a smaller debt load and a more positive financial future.
The IBC streamlined the process, reducing delays from a decade to 180 days, and replaced the Board for Industrial and Financial Reconstruction (BIFR) with a market-driven approach.
Russian insolvency law is intended for a wide range of borrowers: individuals and companies of all sizes, with the exception of state-owned enterprises, government agencies, political parties and religious organizations.
Following the introduction of the Enterprise Act 2002, bankruptcy in England and Wales now normally lasts no longer than 12 months, and may be less if the Official Receiver files in court a certificate that investigations are complete.
Since 2009, the introduction of the Debt Relief Order has resulted in a dramatic fall in bankruptcies, the latest estimates for year 2014/15 being significantly less than 30,000 cases.
In a typical consumer bankruptcy, the only debts that survive a Chapter 7 are student loans, child support obligations, some tax bills, and criminal fines.
However, the debtor is not granted a discharge if guilty of certain types of inappropriate behavior (e.g., concealing records relating to financial condition) and certain debts (e.g., spousal and child support and most student loans).
The "means test" is employed in cases where an individual with primarily consumer debts has more than the average annual income for a household of equivalent size, computed over a 180-day period prior to filing.
If the results of the means test show no disposable income (or in some cases a very small amount) then the individual qualifies for Chapter 7 relief.
These include Social Security payments, unemployment compensation, limited equity in a home, car, or truck, household goods and appliances, trade tools, and books.
[59] In Chapter 13, debtors retain ownership and possession of all their assets but must devote some portion of future income to repaying creditors, generally over three to five years.
Following the soar in insolvencies in the previous decade, a number of European countries, such as France, Germany, Spain and Italy, began to revamp their bankruptcy laws in 2013.
These new law models are meant to change this; lawmakers are hoping to turn bankruptcy into a chance for restructuring rather than a death sentence for the companies.
A faster start-up programme for people affected by bankruptcy operating in Denmark and a scheme to support Belgian business owners and self-employed persons were highlighted in a 2008 European Commission Communication as good practice examples in this field.
