Bankruptcy can be defined as the legal term used for a person or a business that cannot pay back their outstanding debts. This is a common phenomenon with some businesses, and as such, to relieve the debtors of this financial burden, they declare the company bankrupt. This means that the debtor’s nonessential assets which are the property, possession, and excess income are used to pay off creditors, and at the end of the bankruptcy period, most debts are cancelled or discharged.
Process for declaring bankruptcy
Filing for bankruptcy might be a long one, but it isn’t that difficult. The following steps are taken to get petition approval.
Taking of financial inventory
Undergoing credit counselling is the first step to be considered when trying to file for bankruptcy is getting all information about one’s debt, income, assets, property, and monthly household living expenses. This information will be forwarded to a government employee known as the trustee for verification of claims
Undergoing credit counselling
Undergoing credit counselling is another significant step one must experience this credit counselling in any approved agencies for a maximum of 6 months before declaring bankruptcy. Failing to do this will result in the rejection of one’s petition.
Having a creditor’s meeting
This process comes up when one’s bankruptcy petition filed, and it is accepted. The creditors of the debtor or business will be notified their debts in the debtor’s petition. The trustee will then set up a meeting for the creditor or creditors as the case may be. Creditors get the opportunity of questioning the debtor, and the debtor will swear an oath to answer all questions honestly at least to the best of his or her knowledge. After this, the debtor will confirm the wish to move forward with the bankruptcy proceeding. This meeting will also enable the trustee to find out if one is declaring bankruptcy for personal profit or trying to game the system.
The automatic stay
This stay prohibits creditors from making further demands once the debtor’s filed for the bankruptcy petition. Creditors can’t enter liens against the debtor’s property, assets, or money to satisfy an unpaid debt.
Benefits of declaring bankruptcy
Bankruptcy helps people and businesses that can no longer pay their debt to get a new start by selling off their assets to pay their debts and also helping them create a repayment plan. The law of bankruptcy also protects financially troubled persons and businesses.
Filing or Declaring bankruptcy helps a debtor (business or person) to either discard debts or make some plans to pay back the debts. It will prevent creditors from taking action to collect one’s debts and also hinders them from repossessing debtor’s property, which includes cars, furniture, or fixtures.
Declaring bankruptcy allows debtors to begin rebuilding their credit and give room for them also to resolve their financial difficulties.
Why should one declare bankruptcy?
- These are the reasons why filing or declaring bankruptcy is very important
- With bankruptcy discharge, it wipes away the liability of paying all debts
- It enables one reorganize debt
- It stops lawsuits from creditors
- It stops nondischargeable debts like child support and alimony.
Declaring bankruptcy might be complex or sometimes overwhelming, but if you feel it is a better option for you or your business to have a fresh start, then you really should do away with every doubt clouding your mind. You go ahead with it but then, you need to remember to make use of the aforementioned processes. Turn to tried and tested companies who can provide reliable bankruptcy help for Brisbane businesses.