Bankruptcy refers to a state in which a company or individual can no longer pay back debts. A company in this situation is legally declared bankrupt by the courts of law following a specific procedure which is determined by the laws of the land. Under normal circumstances, the debtor is the one who initiates the bankruptcy procedure or the process leading to the debtor being declared bankrupt. In some cases, the lender or a third party may begin the process or may incite the debtor to begin the procedure. The former case is usually rare, while the latter is quite common especially if the debtor is ignorant of the multiple benefits of being declared bankrupt. Irrespective of your state or area of business, you need to fully understand the Bankruptcy law in the US as a whole.
There are numerous benefits that are associated with being in possession of the right knowledge regarding bankruptcy, its demerits and its multiple benefits. Some of the major benefits that come with being in full possession of knowledge on being bankrupt are highlighted below:
Despite the numerous benefits that are associated with being bankrupt, it is not always as easy as it sounds. A long procedure has to be followed before a company, organization, family or individual can be declared bankrupt. Further, a number of conditions have to be satisfied before someone can be declared bankrupt. In some cases, files for being declared bankrupt are denied by the courts of law. Therefore, it is a perfect idea to try by all means to avoid being in a debt crisis. If you are aware of the numerous consequences being in debt and the challenges that are associated with the procedure leading to being declared bankrupt, you will obviously try by all means to avoid being in debt.
To start with, you will be better positioned to take the right step in case you found yourself in a debt crisis. A good number of companies, organizations and individuals have failed to reap the numerous benefits of being declared bankrupt by the courts of law simply because they are ignorant about the state of being bankrupt and the procedure leading to it. You can reduce the chances of falling prey to the consequences of being in debt by being as informed as you can on issues related to the state of being bankrupt and the procedure to adhered to when filing for bankruptcy.
When you are in a debt crisis and you feel that you are in need of debt help, you can file for the state of being bankrupt. The courts of law will evaluate your application before deciding to declare you bankrupt or not. But, you may even guess the outcome of your application even before submitting your file to the courts of law. This would be possible if you had prior knowledge regarding the eligibility requirements for being declared bankrupt.
The Bankruptcy law in the US is governed by the Bankruptcy code or the Bankruptcy Reform Act of 1978. all states across the US adhere to the stipulations of this code. But, individual states across the US may have a few additional procedures which may not be common to other states. Some of the most notable features of the law are indicated below.