Definition - What does Voluntary Bankruptcy mean?
A voluntary bankruptcy is one where the debtor files for bankruptcy of their own volition and is not forced into it through commercial means. A personal bankruptcy is usually a voluntary one. Bankruptcy cases that involve businesses, especially corporations, can be forced upon them when they have not paid several creditors for large amounts whom all received judgments in their favor. If the debtor does not pay the judgements, a court can force them into bankruptcy to satisfy the debts.
Justipedia explains Voluntary Bankruptcy
Although people can also be forced into a bankruptcy it is more normal for the debtor to willingly file. It is viewed as an advantage to the debtor to have one last opportunity to make reasonable payment arrangements on outstanding debts. Voluntary bankruptcies can fall into different chapters of bankruptcy depending on the assets held by the debtor and the related debts.
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