Personal bankruptcy comes into focus when you as an individual admit to being unable to pay up your debts thereby asking a bankruptcy court to relieve you of your obligations or offer you better terms for repayments. Most people prefer declaring their inability to pay up debts so as to get a chance to start all over again even though it means that they have to give up most of their assets to settle the outstanding debts.
Personal bankruptcy can also be termed as a legal procedure allowing individuals to pay their debts and start afresh financially, saving them lots of embarrassing moments. You can either declare yourself bankrupt, also referred to as debtor’s petition or a creditor can put up a petition against you declaring you to be bankrupt. It is important to note that there is a specific amount of money that when you owe someone, he or she has the right to declare you bankrupt. This is also known as creditor’s petition and the amount varies from one place to another.
Soon after the court declares you bankrupt, all your creditors will be hindered from colleting any debts from you awaiting the decision of the court. In most cases the assets you own will be taken over and sold to help settle the debts that you owe your creditors. If the asset value tends to be below what you owe people, you will be issued with a repayment plan you have to abide by in paying the remaining debts.
With bankruptcy claim, you could be exempted from fines that have been incurred with your failure to pay your debts. However, there are cases where you have to pay every single cent you owe your creditors including the fines incurred within the period if you have failed to pay according to the terms agreed on. You could remain in personal bankruptcy for up to three years depending on how much your assets are able to settle. This is because there are certain payments you need to make on a regular basis to settle every single debt that is still outstanding. Failure to follow the court’s directive could lead to the amount being forcefully deducted from your income.
