"Bankruptcy is the legally stated process when there is a financial problem. The main purpose of bankruptcy is to aid the individual and a company to come out of the financial crisis and they can start a new business. Bankruptcy litigation is the legal act involved to obtain debt relief by filing through court. Based on the Article1 section8 of the constitution lading the parliament which create the laws relating to bankruptcy and by that all the cases are prosecuted in federal level not in state level. Bankruptcy is of two types; voluntary is for debtor and involuntary is for the creditor. In the applicable sections of the American State code , there are three types of bankruptcy. Two Chapters; 7 and 13 is normally used by individuals and Chapter 11 deals with the businesses. Chapter 7 bankruptcy litigation is otherwise called liquidation as it sells all the possessions of the debtor and it will be brought by the creditors and cancelling all the other debts. According to the type of the case filed one can meet the judge to decide the compensation schedule or can go for a legal bankruptcy release. Businesses can also declare bankruptcy which will either ends up the business or go on with less salary to the debtor. For a person or married couples, there are three forms of bankruptcy. Chapter 7 bankruptcy is normally filed by individuals or spouses. Chapter 12 bankruptcy is limited for the people in farming family and fishermans. Individuals and married ones can also file in Chapter13 bankruptcy. Chapter 7 and Chapter 11 are bankruptcy's two forms deals with businesses crisis. Rarely one can file under the Chapter 15 for any businesses and personal problems. A state or a city can file a bankruptcy in the a chapter 9 which is also known as municipal bankruptcy . The term insolvency and bankruptcy is same but the concept is different . Both of them deal with the liabilities, but the bankruptcy deals with laws while the insolvency is the condition of a person. A company can be insolvent but not be bankrupt. An Insolvency result in bankruptcy. Chapter 11 is use for dept reorganization of a company to file a case and is not allowed to an individual. Thus the chapter 11 in the United States Bankruptcy Code controls all the reorganization of the business without paying to the creditors. Liquidation is depicted in Chapter. When person file a case in bankruptcy court then all the continuing trading will be noticed by the court itself. The court have the power to cancel the debts of a business, so that the company can commence as new. According to the size of the company and complexity of the debt, a company can be free from the debts based on the files under Chapter 11 within some months or years. If the business debt outweigh the possessions, the last result will be that the stockholder will end up with nothing. "
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