Bankrupt or bankruptcy is a condition in which a company or personal stops paying its debt, either it couldn’t pay it or don’t want to pay it. Bankrupt don’t have to be a company that cannot get profit so it cannot pay its debt. In that condition, we cannot say the company is bankrupt unless the court has decided it.

Two main criteria if your company is qualified for bankruptcy are you can’t pay your debts and have a low disposable income. There are two types of bankruptcy: involuntary and voluntary. Voluntary bankruptcy happens when the debtors apply to the court about their incapability in paying the debts.

Involuntary bankruptcy happens when the creditor report to the court that the debtors cannot pay the debt. There are two requirements to bank the debtors in bankrupt condition: the debtor should have two or more creditors, and cannot pay the debt that has matured.

The purpose of both types is the debtors could solve their debts regularly and fairly. When a debtor stated as bankrupt, the court will appoint a temporary guardian with much powers to make any management changes, change financial planning, operate the business in order avoid loss. When the debtors can give assurance, they can take over this temporary guardian’s power.

Therefore, we hope after reading this article you can really understand that bankrupt is not about loss but about insolvency.


Keywords: Bankrupt, bankruptcy,paying its debt, more creditors, management changes, change financial planning, operate the business, guardian’s power,temporary guardian