When we hear or read the word bankruptcy, we always interpret it with a negative connotation. Bankruptcy is a formal collapse process for people with serious debts that they cannot pay anymore. Bankruptcy is usually the last resort and is often applied for when an individual or company no longer sees any meaningful or feasible alternative that can be offered to the creditors or lenders.
A person (or company) may petition for his or her bankruptcy or your creditor may file for a bankruptcy order for you if your situation shows that you cannot pay them back the amount that you owe them.
Bankruptcy is a usually the best escape route for people who are in deep debt. We would not want to say that it is the right thing to do, but to many people, it usually is the best way out. Just remember though that a bankruptcy status would not make your life as good as it used to be. Being bankrupt will make your credit rating go down and will make it tough for you to rebuild your bad credit history.
Some of things that may be negatively affected by your bankruptcy status include several things. First possible problem is that all your assets that are not needed for a basic yet decent standard of living will be sold, including your house. Next, any income that you may have in excess of your basic needs will have to be settled by your creditors. Another problem is that your current job may be at risk. There are some professions and fields that will not allow you to work and get income from them when you are in bankrupt mode. And finally, your credit image will most likely be affected. Your credit card accounts and other bank accounts might also need to be closed down. Beware also because your bankruptcy will be advertised in newspapers, the internet, and will be known to the circle of creditors and lenders.
There are some advantages though in being bankrupt that is why there are people who apply for it. Bankruptcy actually allows you to make everything that you own available to your creditor so you could pay off some, if not all, of your debt. When your bankruptcy status gets lifted, all of your debts will be written off your record. Debt of bankrupt people usually gets written off in one year. Bankruptcy may not seem a good thing, but for some, this may be the best, if not the only one, option that they have.