Bankruptcy cases are rampant in the USA. The federal courts run a jurisdiction just for bankruptcy cases. Declaring bankruptcy gives people a chance to start from scratch. Declaring bankruptcy sometimes means freedom from debts.
Surely, you must be wondering by now, how does the bankruptcy work? There are bankruptcy courts that oversee these processes. If there is a bankruptcy case, then:
- The person who has declared bankruptcy pays as much of his or her debts as he or she can.
- A failing business thinks through and starts from the beginning once again and if that is not possible, then the debtor must provide a scaffold so that his or her assets can be liquidized.
The bankruptcy court prevents the occurrence of a dishonest action with its rules and laws well in place.
In order to declare bankruptcy, one needs to file a petition in the bankruptcy court. This marks the beginning of a bankruptcy case. It isn’t necessary that the petition be filed by an individual; corporations and married couples are equally eligible for declaration of bankruptcy.
On declaring bankruptcy, one needs to declare:
- Creditors’ details
Once one has declared bankruptcy, the creditor cannot take any action towards the bankrupt person for debt collection. The creditors then ought to refrain from:
- Declaring lawsuits
- Continuing lawsuits
- Embellishing wages
- Calling about payment
How does the creditor get to know about these things? He or she is notified by the clerk about the debtor’s bankruptcy petition. Not all bankruptcy cases are the same. Sometimes, the debtor may be allowed to come up with a plan to repay his or her debts and at other times, his or her assets are liquefied in order to repay his or her debts.
Sometimes, the debtors are literally bankrupt with almost no money turning up from the assets. In such cases, the debt is discharged completely. However, it often happens so that the bankruptcy cases get complicated and hence, it becomes difficult to bring the matter to a close. For this reason, from property worth to money owned to creditors, everything needs to be calculated and worked out before the court makes a final judgment.
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