There are several provisions for those who wish to save themselves from the repercussion of debt or delayed debt payment. It becomes especially useful for companies that are not able to pay their debt. So, to save themselves, most of the companies go for bankruptcy advice. You must have often heard companies declaring themselves bankrupt. In this blog, we are going to unfold what is bankruptcy, its advantages, and disadvantages. But, before going ahead, we would like to mention that it is important that you consult a good lawyer or legal consultant for specialized bankruptcy advice.
Let’s Understand What Bankruptcy is?
In simple words, bankruptcy is a kind of insolvency. It aids in writing off debts in case one is not able to repay it. In such cases, seeking professional bankruptcy advice is the best move you can make in case you know that you cannot repay your debt. Well, as positive as it sounds, bankruptcy can have both positive and negative impacts. Hence, you must have a good lawyer or legal consultant who can help with the right advice.
Advantages of Bankruptcy:
As discussed, bankruptcy does have advantages. Here are a few of them:
- It relieves you from stress and anxiety of debt, and you don’t have to deal with your creditors.
- It helps in writing off the debts.
- You can start fresh after a year.
- You may need to make a monthly payment for three years.
- The person filing the bankruptcy can keep a decent amount from their income to live on.
- Creditors have to stop the court action for getting their money back after the bankruptcy order.
- You don’t have to pay back the debts that are covered under bankruptcy.
Disadvantages of Going Bankrupt
There are certain disadvantages to going bankrupt too. Here are a few of them:
- You may need to pay a certain fee for this.
- In case your income is high, you need to make payment of your debts for three years, though this may be distributed monthly.
- Your credit rating will be affected for six years.
- If you are living in a rented house, then it could end your tenancy.
- Your credibility will get affected.
- If you own a business, you might need to close it down, and assets might need to sell.
- Not all the assets are saved, you might need to sell off certain assets.
- In some cases, criminal action might be taken against you, especially if you have done a fraud.
So, we can conclude that bankruptcy has both advantages and disadvantages, but if you get the right bankruptcy advice, you can save yourself both money and reputation. So, it all boils down to the fact that you need to hire a good lawyer for this. There are many legal consultants who have expertise in this field.
What Happens After Bankruptcy?
Normally, bankruptcy ends after a year, so you can start afresh. This is also known as discharge. After this period, you don’t have to repay debts that are covered under bankruptcy. However, bankruptcy doesn’t guarantee complete coverage. There are still certain debts, like court fines, that you need to pay. If the amount is large, then you might need to sell off your assets.
Although bankruptcy might look like an easy solution, what is even more important is that you must take into consideration both the positive and negative impact of the same. In case you are unsure about the same, good bankruptcy advice will help you make the right decision. You must know how it would affect your daily life before moving ahead.