Most of the time, you might have heard about applying for bankruptcy but there are times when you can be declared bankrupt as well. There are many things associated with bankruptcy that are unique and unknown by many. It may not be so common appearance, but it can be helpful to know. Know more about bankruptcy and the aspects relating to it on https://recoverylawgroup.com/bankruptcy/.
How can you become bankrupt?
The high court can declare an individual bankruptcy on reviewing the bankruptcy petition, filed by any of the lenders. A group of lenders or an individual lender can file a bankruptcy petition if the debtor is unable to keep up on the payments and the debt is over and above the threshold specified by the bankruptcy court. The role of the debtor becomes more crucial, and the debtor should cooperate in the best possible way to ensure the bankruptcy process goes about smoothly. Either you can file for bankruptcy by self or lenders, or a related party can initiate the process to confirm bankruptcy from the high court.
What are the bankruptcy alternatives?
Bankruptcy is not a financial gimmick or something that you can take it lightly. It is a way out of a dire financial situation but can cost a significant amount in terms of a credit score, assets, reputation, employment impact, etc. Some of the bankruptcy alternatives are listed below-
- A restructured proposal to some of the major lenders can be made to reduce debt and to arrive at a more practical payment schedule. This is completely to the discretion of the lenders, but some might agree to the same depending on the circumstances of the debtor.
- A debt relief order can be obtained by the debtor if the total debts are below a particular threshold. This can be possible if the debtor does not own any of the assets and is in a dire financial situation and might not even be able to afford the bankruptcy filing fee.
- Debtor voluntary arrangements are another form of liquidating some of the assets and trying to payout maximum lenders. It is like the bankruptcy process, but an insolvency practitioner plays the role of a mediator here and regulates the process. This might not be a great option due to the costs associated with it and not all lenders will agree to such repayment terms.
There are more things associated with bankruptcy that are less known. These can be learned better and utilized during bankruptcy to enable a favorable outcome. To know more about these from the experts in Los Angeles & Dallas, TX, dial 888-297-6203 now.