You might probably have heard of the term bankruptcy but do not really know what it means. Bankruptcy is not just about a business going into closure. Although that is the natural result of it, bankruptcy is actually a more complex process. It allows businessmen to avoid financial debts by not being held liable to pay in full. It also permits them to start a new beginning after the entire process. First of all, bankruptcy comes in different kinds. You can click here for more info. Individual Bankruptcy This kind of bankruptcy mandates an individual to allow the creditors acquire some of their assets. The assets must be equal in value with the debt amount. If there are multiple creditors, the assets will be split among them. The law does not permit the creditors to take all of the individual’s assets. Majority of the assets of the person filing for bankruptcy must remain or at least the court must make sure that major assets are still in the person’s keeping. If the debt is still not paid in full albeit the assets taken, the person must make sure to repay it in a certain amount of time, typically mandated by court. Go to this page to know more. Business Bankruptcy Business bankruptcy is more common than the first. If at any point the company is already not capable of paying their financial liabilities on time, they may want to consider filing for bankruptcy. Nonetheless, it should only be considered as a last resort since there are many drawbacks with it, especially in a business that has already established a good reputation to the public. Starting a new beginning may become more complicated and difficult if the company has a history of bankruptcy. You can read more here about business bankruptcy. What are the exemptions? There are some exemptions with the assets that can be used as collateral to creditors. Regardless of the amount of the debt, no creditors can take all of the debtor’s properties. Some assets have to remain to the individual in order for him or her to start a new beginning. Some of the things that the debtor can keep are real estate property, automobile, essential equipment and furniture, and personal things of value. Some states have varying laws so you might want to know the specific assets that are exempted in the law in your area. Take note that if the debtor has multiple properties of the same kind, they may be included in the mode of payment to creditors. Visit this link to see the full detail. Discover more details in this page: https://www.huffpost.com/entry/top-10-reasons-people-go-_b_6887642.
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