Effectiveness of Insolvency Law in Protecting Debtor and Creditor in Personal Insolvency

This research investigates the effectiveness of insolvency laws in protecting debtors and creditors during personal insolvency. It aims to establish the relationship between insolvency laws and creditor protections, identify specific ways that insolvency laws protect different parties, and identify weaknesses and specific failures of the insolvency laws in protecting creditors and debtors in cases of personal insolvency. The research will utilize qualitative methodology and scholarly sources to establish common findings and conclusions.

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Research: The Effectiveness of Insolvency Law in Protecting the Debtor and the Creditor
in case of Personal Insolvency
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Research
Insolvency is the situation where a debtor is unable to clear or settle his or her debt. Two
fundamental types of insolvency are identified the cash flow and the balance sheet insolvency.
The case flow insolvency reflects a situation where the debtor does not have adequate liquid cash
to cater for his debts shortly before filing for bankruptcy1. On the other hand, balance sheet
insolvency is a situation where an individual or an enterprise has net liabilities that exceed the
net assets. In such cases, companies are advised to close doors by leasing the existing assets to
settle the underlying debts2. Insolvency laws play a fundamental role in protecting and
safeguarding the needs and interests of debtors and creditors. First, it restores the debtor standing
to profitable trading, serve to maximize creditors’ returns, and identifies the causes that trigger
bad debt. Most importantly, insolvency laws protect both debtors and creditors by affording
equitable and fair systems for the distribution and claim of assets. This research will investigate
the effectiveness of such laws in protecting debtors and creditors during personal insolvency.
Research Questions
I. What is the purpose of the insolvency laws in protecting debtors and creditors?
II. What insolvency laws protect creditors?
III. How does insolvency laws protect debtors?
IV. In what ways does the insolvency law create a legal climate to protect debtor and creditor
interests?
1 United Nations Commission on International Trade Law. An Introduction to the UNCITRAL
legislative guide on insolvency law. New York in the United Nations. 2015.
2 Goode, Roy. Principles of corporate insolvency law. London: Sweet & Maxwell. 2011.

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V. What happens in case of a violation during the stay period by the creditors in case of the
personal insolvency?
The Importance of the Research Question: What Happens in case of a Violation during the
stay period by the Creditors?
It should be noted that a violation of the over stay period may attract additional fines on
the initial loans and credits. This means that violators will be culpable for infringements on the
set timelines, and this may attract both monetary and non-monetary fines. This research question
is important is helps to understand the time dynamics that guide decision-making as far as
insolvency laws are concerned. Most importantly, this question enables the reader to identify the
interrelationship between the period of stay, and the related policies or laws whose violation will
attract penalties.
Research Aims
 To establish the relationship between insolvency laws and creditor protections.
 To identify the specific ways that insolvency laws protect different parties.
 To identify weaknesses and specific failures of the insolvency laws in protecting creditors
and debtors in cases of personal insolvency.
Methodology
The research will utilize qualitative methodology as part of conducting this research. The
qualitative methodology provides a flexible and functional model to examine different sources,
and establish common findings and conclusions3. In this realization, the qualitative methodology
will involve the cross-examination of scholarly sources and published literature to correlate
3 Silverman, David. The issues of theory, method, and practice on the Quantitative Research.
2010.

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sources and findings4. An important part of this research is to collect primary data through
interviews and questionnaires. These data collection instruments will enable the researcher to
interact and associate with finance experts, and establish how contemporary insolvency laws
protect debtors and creditors. More plainly, data collected will be based stringently on the goals
and objectives outlined as part of this research.
Identification of Relevant Literature and Bibliography
Scholarly sources will form a fundamental source for this research. Scholarly sources
refer to materials with scholarly or academic reference and which are published by an
authoritative figure. Also, books published on online sources will form a crucial source of
information and data. However, only books published after 2010 will be considered to ensure the
relevance of information and therefore promote the accuracy of data. Also, articles published in
trusted journals and publications such as Harvard Business Review, Forbes, New York Times,
Washington Times, Huffington Post, and the Wall Street Journal. This research establishes that
only trusted and credible publications will be utilized. Most importantly, all external sources will
be recognized and acknowledged through a formal citation and referencing.
Reference List
Goode, Roy. Principles of corporate insolvency law. London: Sweet & Maxwell. 2011
4 Lapan, Stephen D., Marylynn T. Quartaroli, and Frances Julia Riemer. An introduction
to methods and designs on Quantitative Research. San Francisco. 2012.

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Lapan, Stephen D., Marylynn T. Quartaroli, and Frances Julia Riemer. An introduction to
methods and designs on Quantitative Research. San Francisco. 2012
Silverman, David. The issues of theory, method, and practice on the Quantitative Research.
2010.
United Nations Commission on International Trade Law. An Introduction to the UNCITRAL
legislative guide on insolvency law. New York in the United Nations. 2015.