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Bankruptcy is a legal process that assists the consumers to repay their debts or eliminate the debt completely when the funds limited to repay with any other option. There are two categories of bankruptcy such as liquidation bankruptcy and reorganization bankruptcy. When liquidating the court allows the assets to be sold in order to repay the debt at least some of it or maybe all of it once the consumer is considered as bankrupt. When reorganizing bankrupt ordered by the court some debts will be decided to be paid in full while some are decided to be repaid as a percentage of the original debt and others will not be paid at all.
Bankruptcy will not be taken into consideration when the debts are not listed in the bankruptcy papers, child support and allowance, most student loans, debts for personal injury or death caused by driving while intoxicated, Fines and penalties imposed for breaking the law and most tax debts.
In case a bankruptcy restriction order is submitted by the court you will not be able to become a member of the Parliament, you cannot act as a governor of a school or as a justice of peace and not even become a member of the local authority. Your name is also going to appear in the local newspaper under the bankruptcy notices section.
Bankruptcy usually proceeds for a period of three years and a trustee will be named by the courts to sell the educated assets, mandate contributions from your income once it reaches a particular amount and to investigate on financial affairs. You will be limited with obligations during of bankruptcy to tell the trustee if you decide to change the name, obtain a written permission from the trustee when traveling abroad, educate the trustee about any changes in the income and tell the trustee for when of inheritance of property at the period of being bankrupt. Cooperating with the trustee and being transparent with him is also essential.
Eventually bankruptcy brings down your credit rating by around 200-250 points and stays on the report for seven or may be ten years and as an effect you will not be able to apply and qualify for new credit loans for the next four years or may be more.
Bankruptcy is clearly an option you should avoid as it brings many disadvantages unless you are left with no option at all.
