Bankruptcy is a legal mechanism for bringing an end to a dead-end insolvency situation. Although you find several definitions, bankruptcy serves in a way to admit your inability to repay your debts to your creditors, to liquidate some of your assets to pay them to free you from these same debts once the bankruptcy is over.
The goals of personal bankruptcy are many, but they are primarily aimed at releasing the debtor (now called the bankrupt) from his dischargeable debts. Once the bankruptcy is terminated, the bankrupt is no longer liable for the debts involved in the process. It also seeks to stay current or future lawsuits brought by creditors.
Indeed, stopping legal proceedings, including those in progress, is one of the effects of bankruptcy. This prevents creditors from suing to collect their debts since it is now the trustee who administers the bankrupt’s property. In addition, creditors lose their right to contact the bankrupt debtor directly; everything now goes through the trustee.
What are the consequences of bankruptcy?
From a legal standpoint, the remedies and proceedings against the debtor cease. The administration of his property falls under the control of the bankruptcy trustee, who takes care of liquidating them for the benefit of the creditors. After the time provided by law, the debtor is released from bankruptcy.
On the financial level, bankruptcy has consequences on the credit report and on the ability of the discharged bankrupt to obtain financing.
All the advantages of quickly consulting a lawyer for your insolvency problems
Insolvency can soon escalate out of control, leaving no option other than bankruptcy. This inevitability puts your back against the wall and forces you to make a decision short of options, and this is precisely why the time to act is now!
Consulting a bankruptcy lawyer in Katy, TX who knows about insolvency gives you a better chance of avoiding bankruptcy. This may sound contradictory to you, but your lawyer will present bankruptcy as one option among many. It is the role of your bankruptcy lawyer to explain to you not only the advantages of bankruptcy but also to explore alternative solutions.
Conclusion: Acting quickly with a lawyer also allows you to limit the damage and consequences of potential bankruptcy. Bankruptcy may be the inevitable solution to your problem, even after consulting a lawyer to help straighten your finances.
However, this preliminary step may prevent your bankruptcy from taking on disproportionate proportions and causing you to lose more money than necessary. Make no mistake; bankruptcy is the right solution for many people. You need to be advised adequately before making this choice!