Everything you need to know about bankruptcy?
An organization or an individual files for bankruptcy, when they are unable to fulfill its liabilities or repay the creditors. Bankruptcy constitutes a legal procedure intended to help individuals and business organizations eliminate all or part of their debt. Declaring bankruptcy results in several responsibilities you will have to undertake and fulfil, while there will be restrictions on your work and your savings. The Official Assignee is to be updated on every detail that happens in your financial life. You will also be restricted to direct or own a company until you are discharged from bankruptcy. Also declaring bankruptcy can have an impact on your credit score over a period of time until the bankruptcy is discharged.
Mistakes you need to avoid before filing bankruptcy
1. Planning to repay money to family or friends before discussing it with your attorney.
2. Never withdraw funds from your retirement plans to repay debts.
3. Before filing for bankruptcy, transferring assets(property, car, money) to family or friends is considered deception.
4. Not to over-exceed your credit cards or acquire new debts. Unplanned or emergency medical debt can be pardoned, as you don't have a choice, but if you heap your credit just before filing bankruptcy, you will result in repaying all of the debts.
5. Avoid new loans right before filing, this is because you know the borrowed money cant to be repaid and will be considered forgiven when you file bankruptcy is fraud.
6. Avoid repaying borrowed money from a friend or family member there can be a temptation to repay them before declaring bankruptcy. This behaviour is seen as a moral obligation and it should be avoided.
7. Not to conceal assets before filing bankruptcy, it is an offence under the Bankruptcy & Insolvency Act and the Criminal Code. Penalties for criminal conviction and fraud can be imposed and can affect your discharge.
8. Never transfer or sell the property before filing bankruptcy; this is because you surrender your assets in exchange for the forgiveness of your debts.
Benefits of filing bankruptcy
1. The major benefit of Bankruptcy is that it safeguards and protects you from creditors and a stay is created. This will limit your creditors from enforcing any lawsuits that have already started or planning to soon begin, without the permission of the Bankruptcy Court. It will enable your bank accounts to operate which have been frozen by a creditor.
2. All the creditors will be dealt with by law after filing bankruptcy. And your creditors cannot ignore the process and try to obtain money from you. The creditors are also not allowed to contact you for any collection of debt. All the harassment from creditors will be put to an end.
3. The government and the Courts have constructed rules and regulations to help individuals overcome their vast financial burdens.
4. The charges for filing bankruptcy have nothing to do with how much you own. The amount varies from the number of people living under your household to the household income.
5. Eliminated from your debt, once you get discharged from bankruptcy.
Do I Need a Bankruptcy Attorney?
To begin with, bankruptcy is a legal process and you need an expert who can guide you through the process to succeed in the path.
Who is a bankruptcy attorney?
A bankruptcy attorney is a lawyer, qualified and proficient enough to lead you through the bankruptcy process and also deal with your creditors. Hiring a bankruptcy attorney can be a huge advantage, as the attorney knows which papers are to be filed and when the deadlines are approaching. An experienced lawyer also may know the judges involved and how to be prepared for coming arguments.
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An initial consultation – usually free! – to get an overview of your case
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Advice on options available, including what type of bankruptcy to file
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Completed paperwork necessary for filing bankruptcy
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Representation when the case goes to court.
Steps to take when approaching an attorney
1. Initially, you may have to give an overview of your case and carry the necessary paper that contains details of your assets and the details of money you own.
2. When the attorney has made a detailed study on your case, he should offer advice on how to proceed, on the type of bankruptcy etc
Conclusion
For people struggling financially, there are many debt-management solutions available. Instead of making sudden decisions, the individual can explore alternative solutions such as approaching a credit counsellor who can give a counselling service that looks into your finances, discusses the pros and cons of a debt management program, and guides you back into the safe ground. Surveys put forward that job loss and medical emergencies are the two biggest reasons for causing bankruptcy. Moreover, they team up and imbalance a family’s financial plans.
