Bankruptcy is a phrase heard and used by many.
Individuals tend to have pre-conceived notions about bankrupts that
they are individuals who are totally broke. Bankruptcy is a phrase
heard and used by many. Individuals tend to have pre-conceived notions
about bankrupts that they are individuals who are totally broke. But
bankruptcy information can be a real eye opener for debtors who are
contemplating bankruptcy and individuals who are seeking information
about bankruptcy. It helps debunk all the myths attached to bankruptcy.
1)What is bankruptcy?
Bankruptcy is a legal term to formally identify an individual as
bankrupt. It refers to the inability of any debtor or organization to
pay their creditors. In majority of the cases, bankruptcy is initiated
by debtors or organization themselves. The main purpose of bankruptcy
law is to provide any honest debtor a chance to start afresh and to
help a debtor repay his/her creditor/s in an orderly manner to the best
extent possible by the debtor. Debtors are discharged of most of their
financial obligations after their non-exempt assets have been
distributed. Creditors can no longer harass debtors or continue any
lawsuits once the debtor has opted for bankruptcy.
2)Implications of bankruptcy:
Filing bankruptcy is one of the hardest financial decisions. Debtors
must carefully examine the implications of bankruptcy and choose it as
a last resort to deal with financial troubles. Following are the
implications of bankruptcy:
Lose control over your assets (except items/equipment required for
work/household purposes)Cannot act as director of a company/practice as
a lawyer/chartered accountantNegative publicity as a bankruptcy is
advertised in 'London Gazette' and a local newspaperBankruptcy remains
on record with credit agencies, land registry and other organizations
3)Common terms to understand bankruptcy
Bankruptcy petition: Individuals who opt for bankruptcy need to
formally request protection of the federal bankruptcy laws. It involves
filling of two important forms-The petition (Insolvency Rules 1986 form
6.27) and the statement of affairs (Insolvency Rules 1986 form
6.28).Chapter 7 bankruptcy: This chapter of the bankruptcy code
provides for 'liquidation'. The debtor's non-exempt property will be
sold and the proceeds will be distributed among his/her creditors.
Chapter 13 bankruptcy: This chapter of bankruptcy provides a
reorganization plan for individuals with regular income. It allows a
debtor to retain his/her property and pay back his/her debt within 3-5
years.
Debtors could also consider various alternatives to bankruptcy before
filing for bankruptcy. IVA, debt consolidation loan, debt management
etc are proven alternatives to bankruptcy which the debtor can consider
before he/she files for bankruptcy.
For comprehensive bankruptcy information log on to
www.bankruptcy-information.bankruptcy
help
Article Source:
http://www.articlesbase.com/finance-articles/bankruptcy-information-
a-helping-hand-in-trying-times-77845.html About the Author
Reethi R,content developer for bankruptcy
informationAvoid
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