The New Student's Reference Work/Bankruptcy

Bankruptcy may be voluntary or involuntary. Voluntary bankruptcy occurs when a debtor asks to be declared a bankrupt, involuntary bankruptcy when his creditors ask it. In the United States Congress legislates as to bankruptcy, though the states may do so, but a federal statute suspends a state law covering the same ground. Congress has four times passed a national bankruptcy law, that of 1898 being the latest. Proceedings begin by a debtor committing an act of bankruptcy, either by becoming unable to pay or by attempting dishonestly to alienate his property. Then a petition is filed, and the court orders the property to be put under the control of a receiver. The debtor states his affairs on oath and is publicly examined, and the creditors meet. Me may offer to compound with them, that is, to pay part of what he owes. If his creditors approve, the court or receiver may allow the arrangement. If he does not offer to pay, the court says he is a bankrupt and the creditors appoint a trustee. He administers the estate and controls the bankrupt's movements. The latter can at any time after being declared a bankrupt ask to be discharged, but this may be refused, suspended or granted conditionally. When the trustee has divided the debtor's property among his creditors in proportion to the amount he owed each, he is released from his debts and discharged from bankruptcy.