Lifecycle Of A Bankruptcy

The steps in the bankruptcy process vary based on local bankruptcy laws.

The base product provides a bankruptcy business object C1-Bankruptcy that includes a number of common steps.

The bankruptcy is created in a Pending state that allows for all pertinent information to be set up before the bankruptcy takes effect. A Pending bankruptcy can be Canceled .

The bankruptcy goes to a Review In Progress step and stays in that state while the case is waiting for a decision from the court. This is the state where the bankruptcy is considered to be in effect. Therefore, any related suppressions on collection activity or penalty & interest are typically in place by this time. Proofs of claim can also be created at this point.

A bankruptcy case could result in any of the following decisions:

• Additional actions prior to discharge / dismissal - Depending in the type of bankruptcy, an agreed-upon payment plan may be established, to allow the debtor to repay some or all of his/her debt. The bankruptcy sits in an Actions In Progress state, while the payment plan is ongoing. The fulfillment of the payment plan typically leads to discharge. On the other hand, if the payment plan is not fulfilled, the bankruptcy could be dismissed or discharged, depending on the debtor's situation.

• Discharge - This action releases the debtor from personal liability from specific debts and prohibits creditors from taking any action against the debtor to collect those debts. In other words, the debt is written off. Certain types of debts may be deemed non-dischargeable, and thus, continue to be collectible. Any related suppression(s) are end-dated when discharge occurs.

• Discharge Denial - The case cam be denied discharge for reasons involving fraud, such as: transferring / destroying / concealing property within a certain period before or after filing bankruptcy, false oath / claim, concealed / falsified books on financial position, etc. No write offs are done in this case.

• Dismissal - The case can be dismissed for reasons such as failure to provide requested tax documents, failure to make payments under the confirmed plan, failure to pay administrative fees, debtor previously received a discharge for a similar bankruptcy case within a certain time period, etc. No write-offs are done in this case.

The bankruptcy can be Closed after all necessary post-decision tasks have been completed.

Refer to the C1-Bankruptcy business object metadata for an illustration of the bankruptcy lifecycle.