People who are saddled with substantial debts may declare themselves bankrupt, which means they are insolvent and unable to pay off their existing unsecured debts. The declaration of bankruptcy can be voluntary or involuntary.

If you declare bankruptcy, further interactions with your creditors are not necessary. Creditors can no longer take court actions against a bankrupt person. A bankrupt person has a trusty who takes these responsibilities.

Bankruptcy offers you a chance to start everything again from scratch, without being bombarded by your creditors with phone calls or letters, demanding money.

The economy of your country can be benefited from this procedure because it gives persons or businesses a second chance to start fresh.

When should you declare bankruptcy?

The time of declaring bankruptcy will depend on your situation, but usually people declare bankruptcy when they figure out that they will need more than 5 years to pay off all their debts.

The aim of the bankruptcy is to help people with their overwhelming debts, not to punish them. Bankruptcy can be the solution to your problem if you have mortgage debt, medical bills and credit card debt that you are not able to pay and you are financially devastated.

However, keep in mind that bankruptcy will be on your credit debt for about ten years. Bankruptcy provides you with emotional relief but it carries long-term penalties. 

How to apply for bankruptcy assistance

If you need to declare bankruptcy, one of the first things you need to find out is how to apply for bankruptcy, what happens and who can help, click here if you are in need of bankruptcy advice.. First, you have to call the Office of The Superintendent of Bankruptcy or a similar office in your country. If you explain your problem to them, the staff will send you an application form. After filling out the forms, you will have to find two insolvency trustees. There are insolvency trustees who will sign the forms willingly. Then you have to send the application to the same office that provided the forms. Make sure that the trustees you contact are able and willing to help you. They will tell you whether they can help you after you have explained your problems to them.

There are still ways if you can not find two trustees. The office of the superintendent will find ways to enable you to apply for the program.

Some other things to consider

There are several types of bankruptcy. For declaring a business bankruptcy, you will first need to determine what type of bankruptcy you should file for.

To be eligible for the most common type of bankruptcy, you have to liquidate all of your assets. Your trustee will sell your company’s assets to pay to your creditors. If you are a small business owner is the best option for you. The court will ask you to pass an income test.  

Another type of bankruptcy allows you to continue operating while you make a payment plan and reorganise your debts. But your payment plan will be confirmed only when your creditors approve it.

If you are a sole proprietor, the law considers you and your business to be the same entity. There is another type of bankruptcy that allows you to keep all of your property and reorganise your payment plan. Small business owners who have a lot of personal assets can be greatly benefited from this type of bankruptcy.  But you don’t need to thoroughly understand all these laws. A bankruptcy lawyer can help you make an informed decision.

Bankruptcy laws are not simple. If you fail to interpret the laws, you may end up making things worse. If you are going to declare bankruptcy then you should visit this page to find out more information on how to claim bankruptcy and additional support you may need throughout the process. Specialists in bankruptcy can help you understand things better by explaining not only bankruptcy law but other ways to assist with your circumstance.

Additionally, a lawyer can help you decide under which chapter you should file. He can also help you filling out the forms. With the help of an experienced lawyer, you can better understand the consequences of declaring yourself bankrupt.