Personal bankruptcy takes place when a bankruptcy order is issued by a court following the filing of a bankruptcy petition. A petition is filed by the debtor himself (known as a debtors petition) or the creditors (a creditors petition).
A personal bankruptcy order may still be issued even if the debtor declines to agree to it. However, cooperation on the debtors part is desirable. The debtor should attempt to arrive at a resolution with the creditors before bankruptcy is declared. Trying to resolve the case later on is costly and troublesome.
Objective behind Personal Bankruptcy
The objective behind personal bankruptcy is to convert the properties of the debtor into cash and the debtors income into complete or monthly payments to the creditors.
The objective of the debtor when applying for bankruptcy is to postpone or decrease the debts owed legally . When the contracted payment is done, the debtors are able to enjoy a debt free life. In the United Kingdom, the objective behind personal bankruptcy is to divide the leftover assets among the creditors as payment of the debtors.
Alternatives of Personal Bankruptcy
A number of alternatives to bankruptcy are available. These include:
- Remortgage loans
- Debt management programs
- IVA (Individual Voluntary Arrangement -in the UK)
Last Updated on : 10th July 2013