Is Bankruptcy an option you want to take?
Bankruptcy or insolvency means the debtor is unable to meet his obligations. This is a legal declaration done by the court saying that a debtor is unable or do not have the capacity to pay his creditors. In recent years, filing for bankruptcy is very rampant among Americans.
Bankruptcy is not problem in the United States alone; other countries are likewise experiencing bankruptcies among its people. Bankruptcy is a negative for many people; however, this is often an option for people who are deep under debt and wants to end their ordeal.
To understand more about bankruptcy and why this has become an option for some people read on below. This article has been provided to help you decide if bankruptcy is an option for you.
Types of Bankruptcy:
- Voluntary bankruptcy
- Involuntary Bankruptcy
- Supervisor-initiated bankruptcy
Voluntary Bankruptcy
Voluntary bankruptcy is a petition filed by the debtor saying that he can no longer meet his honest obligations and thus may need to resort to dissolving his assets to pay his creditors. Often the course, assets are not enough to cover all debts. In this case, the assets or properties that may be sold as a result of the bankruptcy petition will be distributed among creditors in a proportionate manner.
Involuntary Bankruptcy
In cases where the creditor feels that he will need to file for bankruptcy over the debtor to recover a portion of his money, he may do so. The debtor will have to participate as much as he can in the bankruptcy proceedings.
If there is a way for the debtor to negotiate with the creditor to avoid furthering the petition, he should do so before the bankruptcy proceedings start.
Supervisor-Initiated Bankruptcy
Either the debtor or creditor may seek the assistance of the members of Individual Voluntary Arrangement (IVA) to help them assess the condition of the debtor and if bankruptcy may still be avoided. If not, then the supervisor initiated bankruptcy proceedings will ensue.
In many cases, it is the debtor who initiates the filing of the bankruptcy proceeding. However, while this may be a solution, the effect on the credit rating of the individual filing for bankruptcy may be long; it actually stays on some credit records for as much as ten years.
Before you file for bankruptcy, you may need to try exhausting every means to settle your obligations. If you must talk to your creditors and ask for repayment options and more lenient payment terms, this would be better than harming your credit reputation. However, if you feel that this is the only solution then it may be wise to proceed because this may mean that you can then have a fresh start on your personal financial condition.
You should be reminded however, that some bankruptcy filers conceal their assets or destroy documents. Some even try fee fixing or redistribution. Please note that all of these are illegal. While trying to resolve your insolvency problems, committing bankruptcy fraud will not only harm your credit reputation but may inundate you with legal issues and possibly jail time.
Always ensure that you try hard to manage your resources well to avoid excessive debt that may lead to bankruptcy. Always use Bankruptcy as a last resort if possible
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