Bankruptcy - Not for the Faint Hearted

By: Lucy Bartlett
Submitted: 2007-01-17 16:10:10
Print this article | Tell a friend | For publisher | Social Bookmarking
Rating:
 

Inability or impairment of ability of individuals or organisations to pay off their creditors is known as bankruptcy. Normally individuals and business establishments initiate the process of bankruptcy but sometimes a group of creditors can ask for a declared state of bankruptcy in order to recover money owed to them.

The law of bankruptcy serves the primary purpose of giving a second chance to the honest debtors by relieving them from most of the debts and to enable the debtors to repay the portions of the debts with their available financial resources. For more information visit www.onlinebankruptcyresource.info

To keep the financial ship from sinking, declaring bankruptcy should be treated as an absolute last resort. This emotionally difficult choice can be carried out through a relatively simple process. Information detailing property, income, creditors and debts should be provided to the court and further collection efforts by the creditors is prevented by the issuance of a notice by the court to the creditors.

Child support, alimony, recently accrued back taxes, loans availed by students, large purchases made recently and penalties or fines of government agencies cannot be evaded by filing bankruptcy.

A negotiation with the creditors to reduce the extent of monthly payments should be explored prior to filing bankruptcy.

Non-exempt assets which can be divided among the creditors are permitted by the laws of bankruptcy. In addition, the bankruptcy declaration permits the debtors to be discharged from most of the financial obligations even if debts are paid in full after the distribution of non-exempt assets. Through a legally binding “Stay” the debtor is protected from extra bankruptcy action by other creditors. The creditors cannot demand payment, garnish wages or continue with lawsuits.

In its strictest legal sense, bankruptcy relates only to partnerships and individuals in the United Kingdom. Even though various different procedures such as administrative receivership, administration or liquidation are followed in the cases of companies and corporations, it is often wrongly referred as bankruptcy in general conversation and by media.

A licensed insolvency practitioner or a civil servant (official receiver) is usually appointed as a Trustee in bankruptcy cases.

After the introduction of Enterprise Act 2002, a bankruptcy in United Kingdom normally can not last longer than 12 months or less if the Official Receiver files a certificate in the court stating that the investigation is complete.

After the liberalisaion of the bankruptcy regime by the Government it is expected that bankruptcy cases will increase.

Lucy Bartlett is a proud contributing author. Find more here. For more info visit Bankruptcy or Bankruptcy Alternatives

Article source: Expert Articles

Most Recent Articles in Bankruptcy category

  • Life after bankruptcy is not so difficult - By: Jason Holmes
    "Avoid bankruptcy" is the most common phrase; we come across in our everyday life. There are several disadvantages of bankruptcy. But if you are bankrupt, it is not very difficult to swim out of the situation.
  • Achieving Financial Security in an Unreliable Economy - By: Mohan Mittal
    Financial Security is a false concept that developed in American society based on the idea that security comes from the perceived reliability of a regular or planned paycheck. Many people, believing in the commitment of their corporations to their well-being, have found themselves downsized, layed-off, outsourced, transferred, or, in some cases, even fired. The immediate reality becomes harshly apparent and sadly disappointing.
  • Bankruptcy - Is it the Last Option Only? - By: Michael Killian
    Bankruptcy is available when all other debt payment measures have failed and the unpaid debt is simply beyond the means of the consumer to repay. It is essential, then, to understand debt options prior to bankruptcy and to determine which debt repayment method is the least detrimental. Additionally it is the law of the land that you know your debt repayment options prior to bankruptcy.
  • It’s Official; We Are Now A Bankrupt Society? - By: Stephen Morgan
    The Government’s Insolvency Service claimed that 27,644 people were either made bankrupt or entered into an Individual Voluntary Arrangement (IVA) as a way to control or manage their debts in an ordered fashion.It was too early obviously to know how big a percentage of those who entered into an IVA had it failed by their manager or supervisor but it has been claimed previously that in some cases up to 50/60 percent of those entering an IVA fail to complete it in an orderly manner and therefore find themselves being made forcibly bankrupt at a later date.The other key statistic was that insolvencies were apparently 55% higher than during the comparable period this time last year and the smart money (to spoil the metaphor) is on the figure topping the 100,000 mark for the year.
  • Considerations Before Filing Bankruptcy - By: Jon Arnold
    Financial difficulties can occur in anyone’s life. When you think financial difficulties are more than you can handle, don’t let bankruptcy become your first thought. Bankruptcy should be considered as a last resort, not just the first thing that pops into your head when the going gets tough.
  • People on Benefits No Longer Eligible for an IVA - By: Diana Middleton
    The BBC has reported that people on UK state benefits will no longer be given an option of taking out an IVA to help pay off their debts.In an IVA or Individual Voluntary Arrangement people negotiate a repayment plan with their creditors with an Insolvency Practitioner acting on their behalf. Up to 80% of their debt is written off and interest on debt is frozen.
  • How Do Bankruptcy Loans' Requirements Work? - By: Kate Ross
    Bankruptcy loan’s qualification is not an easy task. You need to overcome serious lender’s wariness about your ability and disposition for repaying the loan you are requesting. At this stage, you need to make no mistakes, your behavior has to be stainless and you need to show the lender that the past problems that led you to bankruptcy exist no more.
  • Bankruptcy Can Be Used As An Opportunity To Start Over And Reset Your Financial Goals - By: Jon Hansen
    Bankruptcy is the last resort that neither the borrower nor the creditor wishes to meet. The impact of this to both sides is negative and long-lasting. Once you are bankrupt, it will remain on your credit report for many years, making it difficult to get any loan, insurance, or a job.
  • Information on Bankruptcy - By: Andrew Marx
    The quick and dirty definition of bankruptcy is when a person who is unable to pay their debt goes to court seeking relief. If you are the petitioner, the court must determine if your debts are truly beyond your ability to pay. Then, depending on your case, either the court discharges the bulk of your debt or sets up a payment schedule that is in your best interests but does not entirely absolve you of the responsibility of paying your creditors.
  • Bad Credit Loans After Bankruptcy - By: Kristy Annely
    Borrowers who have been filed for bankruptcy can avail themselves of bad credit loans. A lower monthly payment is one of the main benefits of bad credit loans. Bankruptcy is a legal process in which a person who is unable to pay his creditors is exempted from immediate payments.