Bankruptcy in World Business

In 2008 bankruptcy rates were far more than any time since 2005. Federal court made it tougher to file bankruptcy. According to AACER, over a million American filed for individual bankruptcy which is 325 higher and companies filing for bankruptcy rose to 50% with around 64000 bankruptcies filed by companies.

This data shows that rate of bankruptcy filling is again going same way as it was back in 2005 and before it. So it can be said that 2005 bank law was not effective to change the underlying economic condition.

Majority of bankruptcies are individual but it is mainly a small business failure. It is noticeable that whenever people file for personal bankruptcy because of debt in business then it is also classifieds as personal filings. So it is also a point that the court law didn’t made a clear distinction about which is which.

"For small businesses that are in trouble," said White, "Filing under chapter 7 is the way to go." White said that the 2005 bankruptcy reforms have an exception that allows small business owners to avoid a "means test" that could bar them from chapter 7.

Expert says that it is good to take advice before filing for bankruptcy. It is not good to file bankruptcy just to shed business debt.