Obvious Things About States Going Bankrupt

Feb 12th, 2014 | By | Category: Legal

No one would have believed that bankruptcy is going to become such a major problem when the term originated in the medieval Italy. Well, here we’re in the 3rd millennium and bankruptcy is a genuine problem with very real repercussions. Most people think that going bankrupt is bad for person who is undergoing the process. These people don’t know all the frauds that people conduct making use of such laws. Simply, if a person cannot pay money to the bank, the people, or a company, court declares him bankrupt. Only a court can make this decision after going through all the evidence before them and finding out that there’s no way for petitioner to meet his fiscal obligations.

Again lot of people believe that they’re home scot free after court declares them bankrupt. However, there are provisions in law for other kind of people or organizations declaring bankruptcy. Initially these laws were to help creditors only and debtor could rot in gaol if he couldn’t pay what he owes. In fact in ancient Greek you could take the person who owes along with his entire family as a slave if he couldn’t make the payment on time. Luckily, modern and civilized people have discontinued this practice. Now a day what happens if you declare bankruptcy is that they’re going to liquidate all your assets and then use that amount to pay back your creditors. If the amount recovered isn’t sufficient to pay back all people, then court writes off rest of the loan as a loss for the lending company.

Of course things aren’t always an s simple as that. Court can order to restructure and continue the company and design a new schedule of payment. Of course the lender prefers this solution over the outright bankruptcy, as it allows for the restoration of his amount rather than losing all of his investment. Of course, it is a desperation move. These one should attempt to avoid as much as possible, you see it is going to ruin your credit rating. Once you declare bankruptcy there is no going back. No one is going to lend you money or even rent you a home or such other property.

States Going Bankrupt Conundrum

And now, some of the lenders behind the sub-prime market have found themselves insolvent. Waves of these smaller enterprises have been going bankrupt, with as many as 22 just last week seeking protection through bankruptcy.

Another factor you have to bear in mind is that all states don’t offer protection to your retirement fund in case you file for bankruptcy. You can end up losing the money that you’re counting to watch you through the hard times ahead. You also have to notify your employee that you’ve filed for bankruptcy and federal court has ruled you as a bankrupt. Therefore, you should only make this decision after careful consideration.

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