How to file for bankruptcy
What is bankruptcy? â—? An individual filing for bankruptcy legally declares that he is not in a position to service his debt obligations. The status of being 'bankrupt' relieves debtors from the legal obligation of debt payment to creditors. â—? Steps to file for bankruptcy as an individual
1. Prepare your balance sheet â—? Bankruptcy is a legally-acquired status and you will have to prove it in court. â—? Court decisions are based on evidence and in this case evidence will be in the form of the assets and liabilities you hold.
2. Consult a legal advisor â—? Talk to an expert advisor on this matter. Your advisor will study your balance sheet and explore the possibility of winning the court case. â—? The advisor will provide an insight on individual filing or joint filing in case you are married.
3. File a lawsuit for bankrupt status â—? Ask your lawyer to file a petition under the Provincial Insolvency Act and fight the case in court. â—? Once you win the case, you will be deemed bankrupt and will be relieved from continuous hounding of creditors.
Advantages of filing for bankruptcy â—? Getting bankrupt is in no way a desirable state, but it is not the end of the road either. â—? You may lose your self-confidence and sense of direction, but you can make a comeback with careful planning.
Disadvantages of filing for bankruptcy â—? Financial distress caused by bankruptcy can disrupt your plans both for the present and the future. â—? All your assets are lost: All your assets are liquidated in case of bankruptcy. The amount obtained is simply drained out in settling creditors' claims. You are left empty-handed which makes a restart highly difficult.
How to avoid bankruptcy? â—? Consult a financial advisor: Financial advisor can help you manage your situation better. An advisor can not only identify hidden sources of fund but can also help in disposing of some liabilities. â—? Negotiate with your creditor: If you feel that buying little time might improve your situation a bit, negotiate with your creditor.
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