Rose and Spedding (2008) agree that bankruptcy is a business concept that refers to a situation where a given business finds itself in a position where it cannot meet is own financial engagement particular on paying the debtors. In such cases, many businesses often file for bankruptcy before they are declared to be bankrupt as stipulated by bankruptcy statutes that have been enacted in different countries. In mentioning bankruptcy, there are three different types with each one differing from one another on their condition of use. One of the common bankruptcies involves the selling of the debtor’s assets in order to pay creditors. Henceforth, such creditors will have no right to the debtor’s future earnings once they are paid (2006). This type of bankruptcy may be filed by a partnership, cooperation, individual or another business organization either willingly or after it has been dragged to the court by its debtors.
In business, there many reasons that motivates people to file for bankruptcy. According to Elias, Renauer and Leonard (2009), most people file for bankruptcy once they lose a job and fail to get another job that may pay well, incur heavy medical expenses, experience failure in business, and undertake divorce or legal separation and due to foreclosure crisis. These factors may contribute to the filing of bankruptcy under the provision of bankruptcy statutes. As an illustration, individuals who are aged 65 years and above may be pushed into filling bankruptcy due to the huge medical expenses they incur in their old age (Benna, Bucci, & Caher 2008).
Benna, Bucci and Caher (2008) believe that individuals who have been declared bankrupt can still have good chances of getting credit cards since most of the credit companies may care less in accessing credit information of those individuals. At the same time, individuals under bankrupt person will be expected to pay for high interest rates as they attempt to rebuild their credit. Additionally, such individual will receive loans but will be classified as “high credit risk” by the loaning institutions (Wakem, 2008, p. 30).