What happens is a debtor or a creditor doesn follow the bankruptcy rules?
• If they can’t pay their creditors, how do people afford bankruptcy lawyers? • Can a debtor give special treatment to certain creditors ? • Can a business be forced into bankruptcy ? Q: What is “bankruptcy” and how does it affect business? A: While technical definitions of bankruptcy can vary, the term refers to a situation where an individual or a business has liabilities that exceed assets, or where the person or business is insolvent by reason of not being able to meet financial obligations as they become due. Virtually anyone or any type of business entity can start a bankruptcy proceeding by filing a petition in federal bankruptcy court. The bankrupt person who files a petition is called the bankruptcy debtor. The filing of a bankruptcy petition affects all creditors of the debtor. There are many different categories of creditors, including: • Secured creditors (usually those with a lien on a debtor’s property) • Unsecured creditors (usually vendors, credit card companies and any
