Covid-19 has changed the arena and brought a new perspective on visualizing the world. The contagious disease has affected not only the health but also the economy. Ongoing other issues further heighten the effect, for example, Russia waging war on Ukraine. Already the world is facing its consequence in the form of an increase in oil prices. All these prime factors lead to stages of bankruptcy.
Speculations are heightened as the next wave of bankruptcy will hit the global platform. Bankruptcy, in its lethal form, is coming. The world has witnessed a global shift in the economy due to the covid-19 pandemic. As a result, debts are mounting while the resources are depleting.
What is Bankruptcy?
Bankruptcy is a situation when a person appears in front of a judge and declares himself bankrupt. The declaration means that he can not pay his debt due to financial conditions. The court will then decide the matter. It provides him relief and exempts him from spending most of his debts.
To hold this position of bankruptcy, a person should fill some requirements. This duration lasts for almost three years and one day. A person should provide every information to his trustee. The trustee is responsible for notifying the lenders about his bankruptcy. Your trustee can also help to pay your loans back.
Do I Qualify For Bankruptcy?
In most instances, you will qualify for bankruptcy.
“Pretty much everyone qualifies for bankruptcy, in some form or another, if they haven’t filed too recently. Getting into court is the easy part. The trick is knowing when to file and how to do it right. Your Lawyer should be doing a lot more than just ‘helping you fill out the forms.” said NY Attorney Dave Roemerman.
Reasons behind the global spike in bankruptcy
The covid-19 pandemic has already affected the world economy badly. The whole world was shut down, and life became stagnant. The unemployment rate increased as industries and factories were closed. Prices of commodities increased. However, this drastic impact also has aftermath. A most common type of bankruptcy that prevails will be Chapter 7 bankruptcy.
Certain factors have made a significant change in the world economy. The most notable is the Russian war on Ukraine. But now, due to war, this trade has been stopped. Russia ranks 3rd in producing oil and 2nd in natural gas production globally. Similarly, Ukraine is the leading exporter of wheat, corn, and sunflowers. Due to this export stagnation, a significant recession period is waiting ahead.
The global inflation and upsurge in oil prices could lead to bankruptcies of many companies. It is speculated that most people under debt will be bankrupt shortly due to unstable global economic conditions. Factories are opting for downsizing, which will directly affect the employee’s financial situation. Hence, people are going toward adopting the pathway of bankruptcies due to unemployment, inflation, low production and high rates, piling interest rates, and global economic recessions.
Salient types of bankruptcies
Bankruptcy is significantly divided into seven main types.
- Chapter 7 bankruptcy: It is also known as straight bankruptcy or liquidation. Most people appeal to the court under this category.
- Chapter 13 bankruptcy: The court approves repayment plans
- Chapter 11 bankruptcy: A person comes up with new ideas to reorganize his business so he can pay his debt.
- Chapter 12 bankruptcy: Family farmers do not have to sell their things to pay the debt. It is a more flexible form.
- Chapter 15 bankruptcy is mainly employed when dealing with certain foreign cases.
- Chapter 9 bankruptcy: It is mainly for the municipalities.
There is speculation about an increased rate of bankruptcy. Many significant factors will be responsible for this drastic upsurge. However, it is suggested that the big powers should take steps by considering all small states. Their small steps could have myriad effects on the global economy.
Bankruptcy affects an individual and has an impact on the country’s economy. More bankruptcy cases will lead to a more fragile economy. Significantly, it affects those countries with little resources. All the governments should form a coalition to find solutions to the problem of a shaky economy. Otherwise, it could have irreversible effects.