Bankruptcy is a state where a business or person is unable to pay their debts. There are benefits that an individual gets from filing a bankruptcy like the possible discharge of certain debts. They also include cushion from harassments over debt collection and more time to prevent foreclosure proceedings. On the other hand, it might have some negative effects including the effects on debtor's credit rating, liquidation of property and the problem of securing loans or credit card. The elements of bankruptcy clearly defined under chapter 7, 11 and 13 (Keenan & Riches, 2007).
The bankruptcy in chapter 7 is where the debtor's non-exempt assets are liquidated and the money is used to clear debts off. It stays on a person's credit report for ten years. The chapter works when a debtor forwards a petition with local bankruptcy court where he/she provides tax information and a list of the creditors. The judge then decides on what to do with an individual's debt (Keenan & Riches, 2007).
The bankruptcy in Chapter 11 is where the debtors can repay creditors through a court-approved plan. The payment takes place while the debtors continue with their respective business operations. In this chapter, the control of the company is with the debtors although an appointee appointed for the creditors’ interest is present. In the application, a business files a petition with local bankruptcy court. The company then provides tax information and a list of creditors. The court appoints a committee to sit down with the creditors and the business and come up with a repayment plan. The company remains running the business (Keenan & Riches, 2007).
The bankruptcy in Chapter 13 involves plans where the debtor organizes a repayment plan to handle the outstanding debts within three to five years. In this chapter, the debt can be paid directly from the regular incomes or wages. Hence, it is referred to as a wage earner reorganization. In the application, a debtor files a petition with local bankruptcy court. The debtor then provides a tax information and a list of the creditors. The court then appoints an impartial trustee to sit down with the creditors and the debtor then come up with a repayment plan. The plan must ensure that the creditors get the money within the 5-year time allowed by chapter 11 (Keenan & Riches, 2007).
The differences between the three chapters are chapter 7. The chapter involves liquidation of the debtor's assets. The chapter involves reorganization of the business to come up with a plan on how to repay back while chapter 13 involves adjustments of the debts of an individual with regular income (Keenan & Riches, 2007).
In chapter 7 debt is cleared at a go while chapter 13 involves reorganizing the company to come up with a plan of repaying debt over a spread period. Chapter 11 is mostly for big business while chapter 7 and 13 can also apply to individuals (Keenan & Riches, 2007).
Warrant of merchantability is implied not unless it is disclaimed by the sale or name. The goods should conform to the expectation of an ordinary buyer. An example is when a good is as agreed. The warranty of fitness for a particular purpose is the case when a buyer relies on the seller in the selection of goods to fit some specific requests. For instance, the violation is when a buyer requests the mechanic to provide some specific tires and instead, receives different tires (Keenan & Riches, 2007).
References
Keenan, D. J., & Riches, S. (2007). Business law (8th ed.). Harlow: Pearson Longman.
