Being in debt is a common occurrence in life. However, it comes to a point where one becomes so deep in debt that they often discover that it is impossible to cope with such a situation. Bankruptcy is a legal declaration recognising an individual’s incapability to settle their debts. Such a declaration usually comes after legal proofing.
Filing for bankruptcy may be done by an individual (the debtor) or by creditors through filing in a court of law. One who is in a state of bankruptcy usually gets relieved of nearly all the debts. However, it is important to seek advice from a financial professional before deciding on filing for bankruptcy.
Other than being relieved of debts, some repercussions are usually associated with bankruptcy. For instance, after one successfully files for bankruptcy and is declared bankrupt, they may not easily access credit thereafter. Another consequence is having their names permanently featured in the national credit history list. A debtor also becomes ‘enslaved’ to a trustee when it comes to matters of their finances as well as assets. Trustees make choices entirely on behalf of their client (the debtor).
A keen examination of the activities that trustees are involved with reveals that:
- Trustees relay information about the bankruptcy state of their clients to creditors.
- They meet the creditors and listen to their say regarding debts owed to them by the debtor.
- Trustees take control of a debtor’s income in order to take a part of it and make repayments to creditors.
- A trustee may sell some assets of a debtor to raise money to repay off the debts owed to creditors.
Filing for bankruptcy
The ‘good’ news is that there is no fee required when one decides to file for bankruptcy. All that one needs is to visit the financial department of their state or country of residence. There will be a decision on whether they are eligible for declaration as being bankrupt or not.
For the filling to be successful, one has to be a resident of a given country or should have assets or business ventures in the country that they reside in. Besides, they should be fully incapable of settling their debts.
Merits Associated with bankruptcy
- An individual gets relieved of nearly all their debts from creditors. A debtor gets immunity from any legal process that may be carried out by creditors.
- A debtor’s income is protected by law to some limit from being deducted.
- A debtor is entitled to run any business activity without restrictions.
- The bankruptcy condition of a debtor is respected by creditors. They are barred from taking any legal action even after the bankruptcy period elapses.
- Assets that belong to a debtor are protected by law after the declaration of bankruptcy. No one is permitted to tamper with their property after their state of bankruptcy has been declared.
Demerits associated with bankruptcy
- The duration for bankruptcy may be lengthened by a trustee upon failure to adhere to regulations and rules. This is likely to hurt the debtor even more.
- The debtor’s record concerning bankruptcy remains in the national credit history for a longer duration or even forever. This may hamper their quest when seeking financial assistance from banks and other financial institutions.
Turn to NR Consulting help with bankruptcy in Brisbane if you still have doubts on how to go through this process on your own.