Business Law: 2: Types of Bankruptcy | Free OER Textbook + Study Guide

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Definition The debtor's legal and equitable interests in property at the time a bankruptcy petition is filed.

Liquidation The process of converting assets into cash to settle debts.

Goal Restructure the debtor's finances and pay creditors' claims over an extended period. The debtor stays in business.

Applies to Individual debtors ONLY. Voluntary only.

Purpose Help individuals with debts small enough and income large enough that a substantial repayment plan is feasible. Individu

Includes Real and personal property, bank and investment accounts, life insurance benefits, and inheritances.

Secured creditor Has an interest in specific property to secure the debt. Examples: mortgages, car loans, liens.