subject: Dealing With Bankruptcy - The Legal Procedure Which Should Be Followed [print this page] Bankruptcy is a financial state that cripples a person or a business so much such that, they are unable to pay up their debts. It is also described as a financial distress situation in which you seek protection by the law from creditors who keep following you so that you may pay them up. Dealing with bankruptcy is normally a process that may cause you a lot of stress if you do not know how to go about it. Before seeking to file for bankruptcy, it is always advisable to seek other alternatives that will help you get out of the situation without necessarily going to court.
Dealing with bankruptcy through the court calls for use of financial resources that you may not even have at the moment. The reason behind this is that, you have to pay an attorney who will represent you in court against your creditors as well as other court charges as ruled out in the proceedings. However, this may actually be a better option than waiting for your creditors to sue you for default of payment. Filing for bankruptcy yourself gives you a number of varied options from which you can choose, unlike when you are sued and are left with no choice.
Before going to court as a strategy to deal with bankruptcy, you need to understand that, as an individual, your bankruptcy case may fall into one of the two forms of personal bankruptcy available. These are;
1. Practical insolvency or bankruptcy. This is the situation in which you are never able to pay up your debts when they are due, and the condition is persistent over a long period of time.
2. Absolute bankruptcy, which refers to a situation where your liabilities exceed your assets and if your assets were to be sold off, they would not be enough to cover for all your debts.
So, if you have finally decided that filing for bankruptcy is the way out, you need to hand in your petition in the courts that handle insolvency cases. These courts can be found in every state, depending on where you are located. However, if your bankruptcy case has to do with your business, the case can only be handled in the state in which the business operates, even though you do not reside there. In the courts, you will be given the legal procedure which should be followed in the process.
The most crucial steps include;
1. Going for bankruptcy-related counseling. Many courts require that you present a certificate of counseling before they can handle your case. This is just to ensure that you are able to deal with the whole process and outcome.
2. Getting an attorney to represent you. The two of you will agree on the charges.
3. Petition is presented in court and the hearings are done.
4. Your creditors are informed and warned against harassing you while the situation is being sorted out. All correspondence from them is handled by your attorney on your behalf.
5. You are made aware of the chapter under which your petition is filed and how much time you are being given to clear the debts and in what manner in terms of payment arrangements.
Dealing With Bankruptcy - The Legal Procedure Which Should Be Followed
