Bankruptcy
"Money saved and money earned can be money spent on a better world."
In plain words, Bankruptcy means inability to pay debts which a person or an organization (like an incorporated company) may owe to others. It becomes a legally recognized status of a person or an organization after prescribed legal process is complied with, and the court declares that person or the organization as bankrupt. Two main purposes are served by someone being recognized as a bankrupt:
- Some persons or organizations may have become bankrupt for genuine reasons or for reasons beyond the control of that person or that particular organization. Bankruptcy gives that person or that organization a new financial life and fresh start in life - the earlier debts are taken care by earlier assets, if any; and the shortfalls are basically ignored. During the process of bankruptcy, and if it is legally declared, the creditors are barred from perusing lawsuits or any other legal actions to recover debts.
- By following the legal process of bankruptcy, the creditors get an orderly and organized way to claim whatever repayments may be possible from the assets of the bankrupt person or the entity.
[edit] Avoid bankruptcy
It is the general perception that bankruptcy rids oneself of all debts and liabilities, and one becomes free to start the life afresh. It is true, but there is other side of the story. Bankruptcy wipes out the debts, and it also wipes out the Credit Rating of the person or the organization involved. Therefore, it is more prudent to avoid bankruptcy.
[edit] See also
- Managing Debt; Learn How You Can Successfully Manage your Debt
- Debt Consolidation; Consolidate Debt to Relieve Stress
[edit] External Links
- Bankruptcy FAQ; All Common Bankruptcy Questions Answered!
- Total Debt Services; A Quality Financial Services Provider
