When Ahmed’s company files for bankruptcy, he requests the court to give him another chance to repay debt. He tells the court that he works for a company from which he receives monthly salary. He thinks he can repay his debts with the salary he receives. Under what legal provision can the government grant Ahmed the option of repaying his debt?
A.
Chapter 15
B.
Chapter 10
C.
Chapter 11
D.
Chapter 13
Answers
A.
Chapter 15
HOPE THIS HELPS. . . .
Answer:
KEY TAKEAWAYS
Firms in a Chapter 7 bankruptcy are past the stage of reorganization and must sell off any un-exempt assets to pay creditors.
Chapter 11 bankruptcy can be called rehabilitation bankruptcy; it allows the firm the opportunity to reorganize its debt and to try to re-emerge as a healthy organization
Explanation:
ou can be insolvent without being bankrupt, but you can’t be bankrupt without being insolvent.
Confused yet? Many people think of the two as the same thing, but they are very different. Insolvency is a problem that bankruptcy is designed to solve.
Insolvency is the inability to pay debts when they are due. Fortunately, there are solutions for resolving insolvency, including borrowing money or increasing income so that you can pay off debt. You also could negotiate a debt payment or settlement plan with creditors.
Bankruptcy is usually a final alternative when other attempts to clear debt fail.
To make things a little more complicated, insolvency comes in two flavors. The first, called “cash-flow insolvency,” occurs when an insolvent debtor can’t make a payment because he doesn’t have the money. The second, called “balance-sheet insolvency,” results when debts exceed assets.
In the first case, the debtor doesn’t have the money to make a payment when it’s due; in the second it might be possible to make a payment with cash on hand, but financial collapse might not be far off. Paying debts will deplete cash and that leads to cash-flow insolvency.
Insolvency only becomes an issue when a creditor seeks to collect and the debtor can’t pay what’s due. Failing to pay debts usually leads to debt collection efforts that force some kind of action. For example, if you own a house and don’t pay the mortgage, you’ll go into default that can soon lead to foreclosure. If you can’t meet minimum monthly payments on your credit cards and you don’t try to work out a solution with the card company, you’ll almost certainly hear from debt collectors.
Think of insolvency as the trigger for financial hardship. If you can’t pay your rent or electric bill because you don’t have the money, you could call faithful Aunt Beth and ask for a loan. If you get one, the insolvency goes away, probably temporarily unless you are able to balance your income and expenses. The longer you are insolvent, the worse things will become.
If you can’t resolve the insolvency, bankruptcy might be the only way to stop your financial hemorrhaging. Showing that you’re insolvent is necessary for establishing a bankruptcy claim. Federal bankruptcy law defines insolvency for corporations and individuals as the “financial condition such that the sum of such entity’s debts is greater than all of such entity’s property, at fair valuation.”
In other words, you owe so much that selling all your assets won’t cover the bill