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Bankruptcy Laws Protect

It is remarkably easy to find yourself in debt. At age eighteen a person can begin acquiring credit cards and loans. Before long they find themselves in a mire of revolving debt and not enough income to get ahead again. There are times when filing for one of the bankruptcy is the only option left to them. It does not magically cure everything and can come back to haunt you for years.

The bankruptcy process begins with a petition to either the High Court or a county court near you. Your petition is then slotted in to the hearing schedule for the Court.

The judge at your hearing has the following choices:

1. They can decide to hold off on making a decision until they receive further information about whether a bankruptcy order is the best course of action.

2. Reject the petition. The main reason this is likely to happen is where a judge deems an administration order would be a better fit.

3. The judge may decide that you would be better undertaking an Individual Voluntary Arrangement (IVA) and decides to appoint an Insolvency Practitioner to supervise this set up. The court would only recommend this if you had assets worth more than £2,000; you have under £20,000 in unsecured debts; and you haven't been bankrupt or made an IVA in the last 5 years. You can also advise the court is this isn't a course of action you want to take.

4. Make a bankruptcy order. If this is the case then you are considered bankrupt from the time the order is made by the Court.

As well as a bankruptcy order, the Court can also issue a certificate of summary administration. This only happens where you have under £20,000 in unsecured debts and you haven't been bankrupt in the previous five years or made an IVA with creditors. The main benefit of this certificate is that it makes administering your bankruptcy simpler and faster.

Bankruptcy laws also prohibit certain types of behavior from creditors and collection agencies. These are a list of rules and regulations that prevent collectors from harassing individuals. One provision in bankruptcy laws prevents creditors, after bankruptcy proceedings have been initiated, to contact the individual again directly regarding the debt.

Bankruptcy laws, even while providing for a fresh start, can stop many of the more embarrassing and threatening aspect of debt collectors. There are laws passed that cease the endless harassing letters and phone calls. The debtor can stop trying to fend off calls to their work or family once bankruptcy proceedings have begun.

Bankruptcy is a serious action and must be considered carefully before jumping into it. It will go onto credit records and can mean the difference in obtaining a place to rent, future auto loans and even obtaining certain jobs. Even the differing bankruptcy allowed under the law can affect credit differently. Anyone considering filing for bankruptcy should know all of the facts before proceeding.