What if someone is bankrupt?

Discussion in 'Debt Collection' started by remnant, Jul 16, 2016.

  1. remnant

    remnant Member

    I was wondering what should happen in the event that someone can't pay his or her debts. Some debtors become insolvent to the extent that they can't service their debts in light of the fact that they don't have assets they can hold onto. What happens when someone is declared virtually bankrupt?
     
  2. Alexandoy

    Alexandoy Active Member

    From what I know, the law gives protection to a bankrupt person from his debt obligations. That means you cannot collect the debt of a person who is declared bankrupt. In America, that has been proven and in fact, Donald Trump has declared bankruptcy before that relieved him of his financial obligations to his creditors. But in our country, I still have to hear of a person who had declared bankruptcy. But with or without the declaration, when a debtor is truly bankrupt and has no more assets then there is no way for a creditor to collect.
     
  3. ray

    ray Member

    Once a person declares bankruptcy the authorities then calculate all his worth and allow to repay his debts accordingly. Once the process is complete the person is free to work all over again without having to pay his old balance. However it is a long legal procedure.
     
  4. Binu

    Binu Member

    In our home country, if a person is declared bankrupt, debt will be collected from this family members (parents, spouse, children). Since father/mother, wife/husband or children cannot reject the relationship with this bankrupt person, the debt will be collected from the close relatives.
     
  5. Decentlady

    Decentlady Member

    I wasn't aware of this situation. I gather it varies from country to country. I do not know the law for this in my current location but ot looks like the government plays a role.
     
  6. Ghost_Writer

    Ghost_Writer Member

    This is a very complicated question to answer because it involves many factors to be analyzed carefully (for example, for those who have their own business: what was the type and size of the company?). Not to mention the fact that government have a direct influence on the laws of each country, so... Basically, every country should have a specific way to solve this problem.
     
  7. Fuzyon

    Fuzyon Member

    Depending on the law a debt collector can go after the relatives of a bankrupt person that's in debt, but of course those people are protected so it's not as easy to get money from them. In general if a person is bankrupt they're free from all their debts until further notice.
     
  8. thisnthat

    thisnthat Active Member

    If you file for bankruptcy and are legally declared bankrupt, they can no longer come after you. Well, wait, I got ahead of myself. That's only true if you actually included their debt in your filings and were allowed to write off what you owe them. Once you've proven that through documentation, they have no leg to stand on. It would likely be considered harassment should they continue to chase the debt. I'm pretty sure it would still show up on your credit report though.

    This is my understanding of the basics. This is not legal advice.
     
  9. Knitting

    Knitting Member

    In the uk, if you are declared bankrupt, a trustee is appointed to take control of your assets. Ownership of your assets passes to that trustee who sells them.

    After fees and expenses of the bankruptcy, including the trustee's fees for dealing with the process, the money is distributed out to the creditors, on a x pence in the £ basis (they often only get a small percentage of their actual loan back)

    Once the bankruptcy is finalised, the debts are written off, and the creditors cannot pursue the debtor for the balance.
     
  10. moondebi

    moondebi Member

    I'm not sure on whether there is any such formal declaration process exists in our country. Had it been so, the poor farmers wouldn't have to commit suicide rampantly failing to repay their debts. After all, they become the real bankrupts whenever there is a bad monsoon. The fear of paying back the loan to the money lenders compels them to take the drastic step. They are not speared even if they are bankrupt in the true sense.
     
  11. Binu

    Binu Member

    That's interesting. Contrarily, in our home country, bankruptcy is announced only by the court. When the debtors cannot pay load, creditor will try to collect debt by auctioning the property, if debt cannot be recovered, the case is sent to the court.
     
  12. ray

    ray Member

    That is the right way of dealing with bankrupts. You know in our country people intentionally do it by hiding there money or investing it in other countries and declare themselves as bankrupt. The latest case is Vijay Malya who has fled away to the UK scamming Indian banks for millions of dollars.
     
  13. RapidBlue

    RapidBlue Active Member

    I am not sure if I understand correctly: it translates to me like this - if any blood relative ends up with the debt, I have a legal obligation to pay his personal debt?

    I am sorry but in my country only a spouse is considered legally obligated to pay such a thing. No other family members are included, especially not the sisters, brothers, parents or children.
     
  14. ray

    ray Member

    I am not referring to blood relation in such a case but the one who is legal heir or inherits the property otherwise. It could be anyone a son/daughter/wife or parents if the person is unmarried. While they enjoy the benefits they should be held responsible for repayment too or part of it as the case be and that is not from their own property but the property left by bankrupt person in the ratio of leftover.
     
  15. RapidBlue

    RapidBlue Active Member

    Yes, that IF you don't think as a criminal, which I do.
    If property is 'sold' within no matter how low sum it is not considered to be an outsource for the debt collection.
    When person go 'bankrupt' he/she make sure that there is no any inherited property and usually get it done in this way, 'selling it out'.
    By the law you can not bill the sold property from blood relatives or any person who owns it.
    If you sell me a car or a house it is mine, it is not an object to discussion should I pay your debt or not. I simply do not participate in your bankruptcy.
    Dus it comes to our mutual agreement how I take care of your family while you draw sticks on the wall in the jail...
     
  16. ray

    ray Member

    @RapidBlue that is not my point in this case but what I am trying to tell is that if a person owes money to people or financial institutes and declares himself as bankrupt. His leftover property should not go to his heirs but the people whom he owe in the same ratio as the cost of leftover and the institutes that provided him money. I have nothing in my mind that a relative should be held responsible for wrong doings of his family member.
     
  17. RapidBlue

    RapidBlue Active Member

    Well if a person is in the debt to the neck I doubt he can plan any inheritance for his relatives, lol. In this case when children still do not own anything he is still responsible for his debt.
    I don't think that debt collectors care if he set his propriety to the inheritance cause or his own, as long they have something to collect.
    You previous answer was an indication for the conclusion that the blood relatives are also responsible for the debt and not that they will not receive their inheritance.

    Inheritance is not owned until you don't receive it.
     
  18. ray

    ray Member

    I wish you knew the people in our country with billions of dollars in their pocket borrowed by the banks and they fled away to other countries. Now our government is finding hard to recover that amount despite their properties and business very much still here. Try to Google "Vijay Malya" and you will know what I mean.
     
  19. Knitting

    Knitting Member

    I am sure every country across the world is the same - there will be some people who are close to bankruptcy or actually bankrupt, while others have wealth.

    Nothing new there I reckon!

    Here in England there are specialist debt charities set up by the government to help people struggling with debt.
     
  20. Nocturnal Writer

    Nocturnal Writer Active Member

    Since it is a "virtual bankruptcy", it is of no importance. It is just a superficial situation as compared to a real bankruptcy like the insolvency of company's business status due to severe losses or inability to recover from financial downfall. Bank is too strict to grant loans without collateral, without chattel mortgage to back up the loan granted in case the borrower is insolvent or bankrupt.