Bankruptcy is an unfavourable position that no individual or business wants to experience. Tabloids are always willing to publish salacious gossip about the latest celebrities to go bankrupt. The U.S. President Donald Trump has even been quite candid about going bankrupt four times.
So what does this actually mean?
Cathy is struggling with debt repayments and has tried virtually every option available to her. She is considering filing for bankruptcy but Is unsure of whether she would qualify or not. This is why she needs to understand the concept fully beforehand.
It’s believed that the word “bankruptcy” is derived from the Italian term “banco rotto,” which means “broken bench”. It is thought that a long time ago it used to be common for bankers to use benches placed in public to do business. Whenever they were no longer in business, they would make this information public knowledge by breaking the benches.
Bankruptcy is a procedure that can help people or companies to pay their debts off, or lower them significantly, while repaying what they owe.
The term is often used interchangeably with “insolvency,” even though they are not the same. Depending on the type, Cathy will either go through liquidation or her debt will simply be reorganised. Ultimately, she will get a new start. It means that according to the law, she needs assistance with finding ways to pay her creditors, which is why a trustee will monitor the process.
She needs to know that it is expensive and nit suitable for everyone. The process is harmful to credit records and is ideal as a last resort.
At the end of the process, the length of which depends on the type of bankruptcy solution, the debtor is relieved of all debts and the money that has been collected is paid to all of the creditors that are owed.