Credit and Debt as Protected By Bankruptcy Laws – Major Intents of the Statutory and Judicial Elements
Credit and debt are related. You create debt by use of credit. When you do not manage your debt well using credit, you open the door to other players.
Did you know that bankruptcy laws protect both the creditor and the debtor?
According to Pittaluga (2000), the bankruptcy law protects borrowers by permitting brief reprieve from the actions of its creditors, whether the debtor is an individual, cooperation or partnership.
The major intent of the law is protecting both the best interests of creditors (e.g. returning property rights to them, dispersing monies recovered from the sale of a debtor’s possessions upon default) and debtors (e.g. compensating them for services not received and/or damages).
As demonstrated in Section 362a of the law where the automatic stay or injunction acts of or by creditors are in force, the creditor is allowed to act in several ways.
Creditors may either commence or continue with judicial or administrative proceedings against the debtor, or enforce a judgment contained. They can obtain possession of control of debtors’ property or create, perfect and enforce a lien against debtor’s property.
Alternatively, creditors can collect or recover a claim against the debtor; set off any debt owing to debtor; criminal proceedings against the debtor; and commence or continue an action for the collection of alimony, maintenance, or support.
A condition that allows modification, termination or annulment of the automatic stay provision is for the bankruptcy petitions filed in bad faith.
Despite the fact that honest debtors that reside in or with domiciled places of business, or property in the United States, file for bankruptcy primarily for discharge, some do not get it. The reasons include removing, destroying or concealing property within years of filling; those who lack sufficient explanation of loss or deficiency of assets; failure to comply with Bankruptcy Court orders; et cetera (Pittaluga, (2000).
Therefore, the law protects both the creditors and debtors.
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