Personal bankruptcy is a financial condition whereby a person is declared insolvent and hence unable to pay up their debts. However this is a condition that can only be determined by the court of law. Therefore it has to be legal for one to be declared bankrupt. Personal bankruptcy is a common condition among people who are married or even single. In that case, when you are caught in this type of situation the financial institutions are bound to deny you assess to credit. This will declare you bad credit worthiness. When this arises, it is safe and wise to seek help from a good bankruptcy lawyer. The lawyer will provide you with the right directions on how to deal with the current situation that you are in.
The bankruptcy lawyer should be fully conversant with the law of bankruptcy. In that case his or her main aim is to help you clear the debts that you owe to your creditors. This will be made possible by identifying the assets and liabilities of the debtor including among them the number of creditors. Personal bankruptcy majorly involves the manner in which the available assets of the debtor are used to settle the liabilities in question. For one to be declared bankrupt, the creditors have to file a petition in court. On the other hand it is the work of the court to prove without reasonable doubt that the debtor is truly bankrupt. This is where the bankruptcy lawyer comes in for the rescue as he or she devices a strategy to prove the creditors wrong.
In the bankruptcy law, there are two forms of personal bankruptcy. For the first type of personal bankruptcy, the assets of the individual are liquidated and presented to the court where they are used to settle the debts owed to the creditors. However, for the latter, the debtor takes the initiative to ask the court of law to keep a particular type of asset. In that case, the particular asset owed by the debtor is not liquefied, in case they honor the request. When that is over and done other assets are used to settle the debt owed.
In personal bankruptcy the trustee is responsible for coming into direct contact with the debtors. In this type of situation, the trustee acts as the agent of the debtor in the settling of debts owed. He or she has the responsibility to inform the creditors of the condition of their debts. One would say that the trustee is the link between the two parties. The trustee takes full control of the debtor's estate. In that case, he or she carries out investigation of the statement of financial position of the debtor's estate.
The procedure of settling the debts in personal bankruptcy gives some creditors priority in the order in which the debts should be settled. There are those types of debts like salaries which are called the preferred debtors which should be settled first. In that order, they should be followed by secured, partly secured and lastly the unsecured debts. This procedure should be followed as each debt in each phase should be cleared before attempting to settle to the proceeding debt in the personal bankruptcy.
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