What is bankruptcy?
Bankruptcy is a legal term that describes a financial situation in which a business or an individual can’t pay back their outstanding debts.
The bankruptcy process begins with a request filed personally by the debtor, which is most common, or on behalf of creditors, which is less common. All of the debtor’s assets are measured and evaluated, and the assets may be used to repay a portion of outstanding debt.
One of the advantages of bankruptcy is that it provides an individual or business with an opportunity to start afresh by accepting debts that cannot be paid while offering creditors an opportunity to receive some repayment based on the individual’s or business’s investments available for liquidation. Upon the successful fulfillment of bankruptcy requirements, the debtor is relieved of the debt responsibilities acquired before filing for bankruptcy.
Filing for bankruptcy can assist the release of your legal obligations to repay your debts. It can further help you to keep your house, business or ability to perform financially, depending on what kind of bankruptcy appeal you file. But it also can reduce your credit rank, making it more challenging to get a loan, mortgage, or buy a property or business.
Bankruptcy is a special legal procedure guided by the state legislation.