5 ms·

If you run out of money then you're screwed. What do you do if you are a person who runs out of money and can't pay debt? Surely you have your assets repossess

• ojbyrne 6y ago
  For corporations, it is generally different. "In a Chapter 11 bankruptcy, the debtor corporation is typically recapitalized so that it emerges from bankruptcy with more equity and less debt, a process through which some of the debtor corporation's debts may be discharged." https://en.wikipedia.org/wiki/Chapter_11,_Title_11,_United_States_Code https://en.wikipedia.org/wiki/Chapter_11,_Title_11,_United_S...
  • iso1631 6y ago
    So in a chapter 11 bankrupcy a corporation is let off its obligations, creditors suffer, but the corporation emerges wealthier than ever? Why can't an average person do that?
    • xxpor 6y ago
      They can. This is the distinction between unsecured and secured debt (outside of your primary residence, which has special protections). For most unsecured debt, an individual can get it wiped out in bankruptcy court. The main exception to this is student debt. Good luck ever getting any type of loan for the next decade or so though. This is what's called Chapter 7 in the US. There's a means test here ostensibly to prevent abuse. There's also Chapter 13, which is more of an adjustment plan. You keep your assets, but you agree to pay some portion of your debts over 3 to 5 years. If you don't make your payments, the judge can dismiss the plan and creditors can pursue you under state law for the debt. https://en.wikipedia.org/wiki/Bankruptcy#Chapter_7 https://en.wikipedia.org/wiki/Bankruptcy#Chapter_7