The etymological root of bankruptcy is found in the Italian language, more precisely in the term bankrupt. This term is considered to come from the table or bank that was used by money changers and moneylenders to carry out their transactions. A word that, in addition, it is established that it comes from the Germanic “bank”, which precisely alludes to that piece of furniture that we have mentioned.
The concept refers to the bankruptcy of a company or to be in ruins as for the economy.
For instance: “Despite my father’s efforts, the family business eventually went bankrupt”, “I’m broke! They stole all my savings “, “The mayor assured that the municipality is bankrupt and asked the provincial and national authorities for help to get ahead”.
The concept of bankruptcy can be used in an informal or legal sense. In the first case, it is linked to a economic debacle or yet bad moment of the finance, without having legal consequences: “Juan was fired from work and is bankrupt: we should help him”, “I can’t attend the game tonight, I’m bankrupt.”.
At the legal level, bankruptcy is decreed when a natural or legal person does not have the assets you need to face the current liabilities that is claimed. In other words: when you don’t have money to pay your debts. Upon being declared bankrupt by a judge, a competition or a judgment to determine if creditors can collect your debt from the debtor’s estate.
It is important to clarify that a cessation or interruption of payments does not imply bankruptcy. This situation is declared when the insolvency is maintained over time, is generalized and is objectively insurmountable for those who have the debt.
Once bankruptcy is decreed, the person bankrupt can no longer manage their own assets and is inhibited (cannot sell or encumber their assets).
There is no blueprint for getting out of bankruptcy. However, specialists in economics come to establish that there are a series of recommendations that must be taken into account as they will help to do so:
-It is necessary to reduce expenses. For that, it will be necessary to analyze those that are carried out and end those that are unnecessary, for example.
-When dealing with debts, you have to prioritize them. This means that you have to pay first the most important ones or those that are essential and then the rest.
-As far as possible, you have to try to find another source of income that helps you get out of that bankruptcy situation.
In addition to all the above, we have to state that there is what is known as a bankruptcy reorganization plan. With that term, mention is made of a document with which it is intended to be able to plan the payment to the creditors in the face of the insolvency situation that has been reached.
Specifically, this document makes a list of the aforementioned creditors, the type of debt that is maintained with each one and a plan to be able to deal with each and every one of these debts.