Bankruptcy, a word every adult is afraid of. Everyone knows what it means – kind of – but very few people know what it really means.
Bankruptcy is more than being broke. It’s more than filing paperwork. It’s more than landing on Boardwalk with a hotel on it and handing over all your money and properties. Bankruptcy is a legal term that describes what happens to you when you legally declare that you cannot pay your debts. So what happens next?
Bankruptcy is another legal word for insolvency. It means a person or entity (like a corporation) cannot repay the debts that are owed, and initiates a court order giving them protection under the law. In other countries, only individuals can file for bankruptcy, but in America the laws are applied more broadly, and also covers legal entities.
After bankruptcy is filed, the debtor enters a new financial world, with some benefits and some obstacles. (more…)