Bankruptcy Essay ⋆ Sociology Essay Examples ⋆ EssayEmpire

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Financial and bankruptcy law refers to the laws applied to savings, investments, and loss, among other economic areas. Financial law deals with the broad range of saving and investment products as well as the services related to these products. These include personal finance, corporate finance, credit trade, budgeting, and stocks. Bankruptcy law, on the other hand, regulates the declaration of an individual or company’s inability to pay creditors. It is also related to financial stress, asset sales, and macro-economic fluctuations.

Financial law plays a very important role in the world economy and typically covers the following areas: banking – including banks, trust companies, saving banks, savings, loans, and credit unions; brokerage services including broker disputes; commodities; consumer lenders; insurance; investments; mortgages; mutual funds; and stocks and bonds.

Bankruptcy law involves the development of plans that allow debtors to resolve debts through the division of their assets among creditors. This may also allow a debtor to stay in business and use revenues to resolve his debts. Bankruptcy law also allows some debtors to be discharged of all financial obligations after their assets are distributed even though debts have not been paid in full.

Bankruptcy laws diverge enormously across different countries. In the USA the focus has been on salvaging the business as a whole, while British law is designed more to support creditors. Developing countries (”third world”) and economies in transition (”second world”) vary economically – but also legally. Thus, each one typically adopted its own version of the bankruptcy laws. No one is certain about which model is best. The reason is that no one knows the answers to some basic questions: are the rights of the creditors superior to the rights of the owners? Is it better to rehabilitate than to liquidate?

For example, the effects of strict, liquidation-prone laws are not wholly bad or wholly beneficial. Consumers borrow less and interest rates fall – but entrepreneurs are deterred and firms become more risk-averse. Until such time as these questions are settled and as long as the corporate debt crisis deepens, we are likely to witness a flowering of disparate versions of bankruptcy laws all over the world as we watch the numbers of bankruptcies increase.

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