DECLARING BANKRUPTCY: What’s and How’s

Bankruptcy is a status whereby someone or a business venture is unable to repay well known debts. Bankruptcy begins once a debtor files a petition on behalf of creditors. This is followed by measuring and evaluating the assets of the debtor and using them to pay some portions of the outstanding debts to the creditors. Once that is successfully done, the debtor can be free from debt obligations earned before filing for bankruptcy. Bankruptcy is viewed as a method of doing away with your debts and starting life afresh. It is an effective way of relieving yourself from debts and is often the best thing you could do. Before declaring bankruptcy one is advised to speak to a debt expert, scrutinize every avenue and finally make sure you understand the effects that declaring bankruptcy will have on your life.

declaring bankruptcy

Petition To Become Bankrupt

This refers to an official document that is filed in a federal court to begin a proceeding to provide a way by which a debtor who is unable to pay outstanding personal debts will satisfy the claims from her creditors. There are two types of petitions in cases that involve bankruptcy:

·        Involuntary petition is one that is filed by a prescribed number of creditors whose total sum of claims are past a certain amount.

·        Voluntary petition is one that is filed by a debtor who is willing to make plans for the payment of debts in order to be relieved of the liability incurred from them.

Once a petition has been filed, the bankrupt person is issued a bankruptcy number and his financial affairs are officially monitored by a bankruptcy trustee until discharged which often happens after three years. During this time, there is a range of restrictions that one is expected to follow.

What Declaring Bankruptcy Means

Declaring bankruptcy is regarded as a process whereby a federal court helps debtors and businesses repay their creditors only if you can prove that you are entitled to it; the court protects the debtor or the business during the bankruptcy proceedings. The debtor is allowed to evaluate his property and it can be sold in the process of liquidation and used to pay the creditors. It means closing up a business if you own one, giving up most of your assets and selling shares and property to pay creditors.

The debtor can also be allowed to keep the property but must submit and stick to a repayment method plan for the debts within three years. Some debts can be forgiven such as credit card and unsecured loans. Child support fees, due taxes and a few others cannot be cleared.The effects of bankruptcy vary according to assets, amount of monthly income and the number of active defendants one has.

Burden of Debts refers to a situation whereby an organization or country owes to another a large amount of money that they find hard to pay. The servicing of the debts is difficult to cope with, thus a burden. This leads to inheritance of heavy debt burdens from predecessors thus affecting the economy of a country or operations of an organization.

For more information, just visit us at HTTP://WWW.DEBTHELPLINE.COM.AU/DEBT-SOLUTIONS/BANKRUPTCY/.

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