People usually tend to be exposed to an optimum level of risk in pursuing business activities. There must a sufficient safety that is accorded to the risk takers that they are ensured a minimum level of safety in case a business goes wrong. The role of Chapter 13 bankruptcy laws is to ensure that more people would be willing to venture into new businesses and business activities are encouraged in society. It is keeping this requirement in mind that the various bankruptcy laws are framed.
When there is a safety net that would ensure a minimum level of protection to any risk taker would ensure that more people would venture out in business activities and that there would be a greater risk appetite.
Chapter 13 bankruptcy laws, the difference
It would be common for most people to have heard of the chapter 7 and chapter 13 bankruptcy laws. There are other laws and regulations that deal with the subject of bad loans and unrecoverable debts. But the above mentioned laws are what most people would come across commonly and the most utilized ones too.
Principally the Chapter 13 differs in its predecessors in that the amount of protection accorded is higher. It thus is possible to use more amounts and it is the large amounts of money that are kept protected by this provision. Thus the Chapter 13 would have a minimum threshold level that need to be crossed in order to be applied in term of debt incurred.
The level of protection that a Chapter 13 would be typically more than a Chapter 7 and this is so to help the larger risk takers and people having a higher financial aim.
The need for risk takers in society
In general, society moves forward only when economic activities take place and procedures must be in place to encourage greater risk and hence a greater thriftiness. This brings about greater efficiencies in enterprises and the greater involvement of members of society at large. It takes larger capital to have an business activity that affects the most people.
Thus along with the amount of risk taken must also be the safety accorded to the risk takers that they are not left without a minimum standing in case something goes wrong. The issues that normally crop up in smaller ventures are very different from those that come about in larger business enterprises. Not only are the points larger in importance it is also seen to be much more acute.
Would bankruptcy laws be sufficient enough?
In most instances of the application of Chapter 7 or Chapter 13 bankruptcy laws, the situation is mitigated to an acceptable level to a large extent. There is bound to be smaller issues that skirt the larger happening and this is to be expected in any situation. But by and large society is far off by applying these bankruptcy laws than without a protection given by them. They in the end seek to protect than prevent an unpleasant happening.