Bankruptcy Basics

Bankruptcy is a legal document declaring the inability of an individual or organization to pay creditors. An individual debtor or organization who is unable to make payments to a creditor files a “voluntary bankruptcy” legal document.

Before filing for bankruptcy, it is crucial to read the US Bankruptcy Code Title 11. Additionally, though it removes debt owed, filing for personal bankruptcy makes borrowing in the future more difficult.

Alternatives to Bankruptcy

• Take No Action
  If the debtor has no assets or wages that could be seized by a creditor, simply taking no action is better than declaring bankruptcy.
• Negotiate, Negotiate, Negotiate
  Creditors fear personal bankruptcy because they will not receive any payments from the debtor. Therefore, most creditors are willing to negotiate in order to receive partial payment of the total debt accrued.

It is important to remember that filing for personal bankruptcy is serious financial decision. Borrowers should only file for bankruptcy if there is no other viable option to manage your debt.

If you have no other alternatives, there are two ways to file for bankruptcy: either file for a liquidation bankruptcy, or file for an adjustments of debts repayment plan, which usually encompasses a payment plan over the course of 5 years.

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