Bankruptcy Solutions

Bankruptcy means that one is no longer able to pay creditors. It happens to individuals as well as small businesses and large corporations. There are many causes of this, among them is uninsured medical bills and overuse of credit cards. The first process into declaring bankruptcy is filling a petition in court. This can either be voluntarily or involuntary.

Voluntary insolvency means that the debtor goes to court himself to file the petition, while involuntary filing is when the petition is filed by other parties involved such as the creditors. For a petition to be accepted in the court, one should go through a counseling session on credit management. A petition is only accepted on condition that the debtor has not failed to respond to earlier court summons on the same issue. On filling the petition, the debtor is also required to file financial statements such as balance sheets, income statement and any other relevant financial statement that will allow the court to determine whether they are fit to be granted a hearing in court or not.

Once this has been done, a trustee or insolvency administrator is appointed by the court. These officials help in making sure that the debtor and creditors are relieved on any responsibilities towards the property. There are three rules mainly used in the insolvency solution which are commonly known to many. However, there is the forth that is not commonly used in the courts.

This is known as the Talmud rule which combines the equal award rule and the equal losses rule. This old method of solving bankruptcy is known as the three musketeers since they appeared to be three yet in real sense they were four. A combination of the three rules and other independent characterization brings out the reality of the Talmud rule.

Tagged with: bankruptcy • Solutions

Filed under: Bankruptcy information

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