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Bankruptcy and insolvency, By: Juan Sebastian Raad - Coggle Diagram
Bankruptcy and insolvency
Bankruptcy
The state of completely lacking goods and unable to pay debt.
There are two types of bankruptcies
Liquidations
Requires giving up goods or property owned by you that can pay your debt
Reorganization
Based on how much money you make and your expenses, you'll be expected to pay a monthly fee until you leave bankruptcy. In the case of businesses, they can continue working while paying their debts
Insolvencies
A law that is dedicated to helping people who are suffering from debt to be able to pay their debt. It can break up
Law 1380 from 2000 in Colombia
Laws that help this cause in Colombia and the US
Law 1380 of 2000, Colombia
Chapters 11 and 13 from the US Constitution
Recommendations to avoid bankruptcy
Be constantly aware of your financial situation
Calculate your real income
Take inflation into consideration
Avoid high-risk loans
Make a long-term economic plan
Have a monthly budget and control your expenses
Learnings
Bankruptcy is achieved by poor management of funds
The best way to avoid bankruptcy is by always having a budget and knowing your real income
People must be aware of inflation, as a massive shift in inflation can lead to bankruptcy. Having a safe amount of money stored for contingency can be a good way of avoiding this
By: Juan Sebastian Raad