Bankruptcy is a confusing and often misunderstood topic. Many people don’t understand what it means, which can lead to many misconceptions about bankruptcy. This blog post will serve as a guide for the basics of bankruptcy.
What is bankruptcy?
Bankruptcy is a legal process for people who are unable to pay their debts. The goal of bankruptcy is to relieve you from obligation, stop creditors and collectors from taking your property, give you time to pay back what you can afford, and help rebuild your credit rating.
The Roemerman Law New York bankruptcy lawyers work with people throughout New York and Long Island to help them understand their options for filing for bankruptcy.
What makes a person bankrupt?
- When you can’t pay your debts as they come due.
When a person can make the minimum payment on their credit cards, but not enough to reduce the debt, that’s a sign of bankruptcy. It usually happens because people have lost their job or had some emergency expense for which there was no money left over after paying living expenses and bills.
- When creditors are calling.
If you’re receiving several calls per day from debt collectors, that’s another sign of bankruptcy. Creditors often take a very aggressive approach when they think you’re going into or considering bankruptcy.
- You file for bankruptcy.
If you go to the trouble of filing legal paperwork, that’s a pretty clear indication of your intentions. Filing usually results in creditors calling even more frequently and may result in lawsuits against you, instead of just the business where you owe money or goods which can’t be returned.
- You give up assets.
Bankruptcy is a legal process that results in the court controlling your property for some time until they can figure out how to distribute it amongst creditors and others with claims on you or your business.
During this time, you must turn over control of all possessions to an assigned trustee who will look after them when necessary (to pay bills, sell items) until the bankruptcy proceedings are finished.
- You lose your belongings.
While bankruptcy proceedings are taking place, there’s a chance that you’ll have to give up possessions that aren’t protected by law from creditors and others with claims on you or your business (such as personal goods).
Bankruptcy is a complicated legal process, but it doesn’t have to be so scary. If you follow the guidelines and understand what bankruptcy will do for you (and not do), then it’s likely that people won’t think of your filing as negative or bad.