Although bankruptcy is complicated and the exact steps can vary from country to country, each type of bankruptcy uses the same terminology and follows the same basic process.
Two main parties are involved in bankruptcy filings, the debtor and the creditor. The debtor is the party who has debt, or owes money, to the creditor. A debtor can be a company or an individual. The creditor is an organisation or company that claims the debtor owes property, service, or money.
The type of bankruptcy that you file depends on several factors, including whether or not you’re an individual or part of a corporation.
In the United States Bankruptcy Code the four types of bankruptcy are named for their respective chapters namely Chapter 7, 9, 11, 12 and 13.
Bankruptcy in South Africa can be obtained in more ways than one, depending whether the debtor is a natural person or a legal entity. The term ‘Natural Person’ includes a single male or female, a couple married in community of property, a person married out of community of property, a sole proprietor and a partnership. While the term ‘Legal Entity’ includes Close Corporations, Private Companies, Public Companies, etc.
Creditors will usually keep instituting legal proceedings against you until the debt has been settled in full, including the interest on the capital amount, legal fees, collection commissions and disbursements. The legal fees are usually charged on attorney client scale, which could easily result in exuberant legal fees being charged.