Bankruptcy what is It?

Bankruptcy what is It?

Bankruptcy what is It?

Bankruptcy is a term used when an individual or a business finds itself unable to pay those who have lent money to them or have supplied materials on a full credit or partial credit basis. This is state reached due to poor management practices, giving more attention to secure in business, but not to proper keeping of accounts. While the accounts receivable may not bear interest, the debt payment will creates interest debt. The net result is the payables become more than the receivables. When that situation is reached, the usual reaction is to borrow more money, from other sources and start making payments to creditors. But what's forgotten is that a new set of creditors are being created, with more interest payments owed. Under such circumstances, the remedy can ultimately be for the person or business to file for bankruptcy before the creditors start litigation proceedings. Usually a bankruptcy attorney is consulted before going any further. He is the best person to give advice whether the case is fit for filing for bankruptcy and also whether it should be under chapter 7, 11, or 13 of the bankruptcy Law.

Loans vary in nature and terms. We are not referring to loan sharks, to whom many people turn when things are desperate. There is no hope for in those situations. Loans are taken for different purposes. Defaulting in payment occurs in the case overdrafts from bank also. It is pities that due to personal consideration and perhaps the market reputation of the business concerned, banks do allow payment in excess of the overdraft limits. They do this in the hope of getting a little more interest. Loans are taken for starting new business and also for running of the existing business. While the loan for starting a business is given with a collateral cover, the other loans are given in hope of adjusting the payments that will go through them when the customers of the business pay for goods or services. Business houses get a false feeling of having enough funds when they get materials on credit but get payment from their customers with an advance and the balance against an advance invoice before supply.

Other loans are also given. They may be for business purposes in the case of certain proprietary locations. These loans will have the same modus operandi as loans to business houses. The most common loans besides these are mortgages, for purchase of land, house or apartment or for the construction and repair of real property. Loans are also taken in the form of student loans, borrowed for higher education of young adult children.Some loands to meet marriage expenses, medical treatment for those not covered by medical insurance. Those without collateral are subject to the interest rates level of the borrower and the ability of the lender to collect the money, legally and ethically. In all the above cases, if the borrower is not able to pay the dues also does not have the resources, he has no choice but to consult a bankruptcy lawyer and file for bankruptcy.

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