If you are drowned into a pool of debts and are left with nothing, it is quite certain that you file for bankruptcy. Bankruptcy is the situation in which a person owing multiple debts knocks the doors of court so as to relieve himself from this burden.
There are many reasons, which make a person file for bankruptcy like severe loss or failure in business, medical bills, credit card bills and other due payments. The multiplicity of these debts brings an individual on the verge of bankruptcy.
There are few things that need to be kept in mind before filing for bankruptcy. Not all your debts will be discharged. Debts such as child support, alimony payments, public policy and any other court related debt is non-dischargeable. If your debts are related to loans, and other outstanding payments that are beyond the repayable capacity then it is right to go for bankruptcy.
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Incurring a debt is not the only factor. The amount of credit that you bear is equally important. Health is another aspect considered while filing for bankruptcy. If a person is ill since long and he is left with limited financial resources, he has the option of declaring himself as bankrupt.
A trustee is appointed to carry out the bankruptcy proceedings. All the assets of the bankrupt are immediately vested in the hands of the trustee. Things such as tools, books, clothing, bedding and other household equipments remain with the bankrupt.
A bankrupt is strictly restricted on the following:
o Holding a public office.
o Involved in the formation of a company without the consent of the court.
o Acting as a trustee of a charity fund.
o Carrying out a business in some other name.
Earlier, the bankruptcy period was 2-3 years but since 1st April 2004 amendments have been brought up in the law. Now a bankruptcy usually lasts for a period of 12 months. After this, the bankrupt can make new start.
Filing of bankruptcy may sometimes have a negative impact on the personality of the debtor. It may result in depression, low self-esteem and even shame. It might also not let you get a job or start a new business in future.
There are many alternatives to bankruptcy.
o Opt for a debt consolidation loan.
o Renegotiate secured loans.
o Consult a consumer credit counseling service.
o Seek the help of an attorney.
Declaring bankruptcy should be the last option for a person. Still if it seems that all existing alternatives can do you no good, you can file for bankruptcy but it is advisable to take the help of a legal assistant who would guide you on how and when to file for a bankruptcy.
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