There are a number of things that you may need to understand before you finally decide to file for bankruptcy. Bankruptcy is an option that many people tend to go for when they have accumulated debts that they are unable to pay for. However, before you decide to file you should first understand what bankruptcy entails.
How does one become bankrupt?
A person can declare to be bankrupt if they cannot seem to find a permanent solution to their financial problems. Also, a creditor can go ahead in a court of law and have an individual declared to be bankrupt. However, it is important to keep in mind that a creditor cannot be able to do this is the debts of the particular individual are below $5000.
Even though this is the case, there is really no amount needed for an individual to declare or file for bankruptcy. However, the official receiver of the bankruptcy filing can go ahead and reject your application. There are a number of reasons that may make your application to be rejected. They include if an individual is unwilling to pay off any other debts that they may have if the particular individual has declared for bankruptcy more than once and if the particular individual was bankrupt in the previous 5 years.
When someone decides to declare for bankruptcy willingly, then he or she must fill in a debtor’s petition form. This form is able to list all the individuals’ creditors, debtors as well as the total amount of debts that the particular individual is supposed to pay. The standard period in which one can be able to stay bankrupt is 3 years but in some cases, this period can be extended if the trustee makes an application.
Once a particular person is considered to be bankrupt, there is going to be a trustee who is going to be appointed. This trustee is going to be charged with the responsibility of managing all the debts since all the property is going to now belong to the trustee. If you need help hire a top debt attorney.
Should a person opt to go for bankruptcy?
There are a number of benefits that a person may face when they decide to declare themselves bankrupt. One of these benefits is that those unsecured creditors are not going to be able to pursue any kind of legal action against you. Creditors like banks are also going to be prevented from pursuing their dents from you against your property since it is going to be secured. However, it is important for you to keep in mind that a person who is considered to be bankrupt is not released from the obligation that they have to pay their debts.