An individual files for bankruptcy when they are unable to pay off their debts. Bankruptcy is considered to be the last resort. It is one of many ways in which a person can settle their debts.
The bankruptcy process begins when an individual or business is unable to pay the money that they owe. A debtor must face the facts that they were unable to pay their debts.
Facts about Bankruptcy
There are some important facts about the bankruptcy process. Sometimes, a first time debtor may be cleared of the charge one year after filing for bankruptcy.
Bankruptcy occurs when the borrower believes that there is no way they can pay their loans. Usually bankruptcy is declared by an individual who has exhausted all other ways of repayment.
Alternatives to Bankruptcy
There are alternatives to bankruptcy. The most popular is the Individual Voluntary Arrangement Procedure.
Procedures of Bankruptcy
In order to be declared bankrupt one must follow certain procedures. The most important and basic procedure is to divide the debtors assets equally between the creditors.
Advantages of Bankruptcy
The main advantages of bankruptcy is that it allows the debtors to start over in their financial lives. However, there are also downsides to bankruptcy. The main one is that there are some financial restrictions imposed on the debtors.
Ways of Bankruptcy
There are several ways of declaring bankruptcy. Sometimes an individual voluntarily files for bankruptcy. Sometimes bankruptcy is involuntary, as the debtor owes much more than they can repay. At times,a supervisor or other unit can declare a debtor to be bankrupt.
Implications of Bankruptcy
A debtor faces many consequences after being declared bankrupt. First,the debtor loses control of their assets and cannot borrow more than a certain amount of money without permission from the lender. The bankrupt person is also prevented from being directing, managing or promoting business enterprises without prior permission from the court.
Those who have declared bankruptcy cannot work as Members of Parliament, Justices of Peace, Lawyers or Chartered Accountants. They are not supposed to participate in any business activity or local governmental organizations. The bankrupts are under the scrutiny of the courts and their credit records are deeply affected.
Last Updated on : 10th July 2013