Creditor's right and bankruptcy Term Paper Example | Topics and Well Written Essays - 1500 words

Creditor's right and bankruptcy - Term Paper Example But creditors have certain rights in bankruptcy claims. This paper briefly analyses creditor’s claims in bankruptcy cases. Business is not the right profession for all the people. Many people failed to prosper in business because of their inability in managing the business successfully. In some cases, unexpected business climate changes can destroy the backbone of the business people. For example, the recent financial crisis came quiet unexpectedly and even prominent business groups struggled for the survival. In short, business can be a risky act at times because of so many reasons and the entrepreneurs may fall in a state of bankruptcy. Bankruptcy is the legally declared inability of an individual or organization to pay its creditors. The outstanding debts might be too much for the person or the organization to pay at once and the court or judge will determine the payment schedule based on the type of bankruptcy filed by the entrepreneur or the organization. When a business enters the bankruptcy state, it means either the business is closed or the the business will continue to operate with reduced payments to debtors. This paper briefly analyses the creditor’s right and bankruptcy in a legal environment. Creditor is a party (a person or organization) which provided certain money, property or services to another similar party (Debtor). In other words, a debtor is a borrower from the creditor. Debtors normally file bankruptcy suits in order to prevent the creditors from collecting the debts immediately. A bankruptcy suit prevents a creditor from taking any action against the debtor till the court take any decisions on the case. However, creditors have certain rights even after the debtor files the bankruptcy case as the debtor might have signed some legal contracts with the creditor before the actual deal was taken place. Some debtors file bankruptcy cases even