Bankruptcy Filing? How To Do It With ITSA

When you file for bankruptcy, you are in effect requesting for the government to make you bankrupt so that you can rid yourself of all your debts and stop your creditors harassing you. Bankruptcy has grave consequences and should not be considered lightly. Before you opt for bankruptcy, you should investigate all the alternatives that you might be able to use to relieve you of your debt burden.

A creditor can choose to make you bankrupt or you can choose to do so voluntarily. Once you have carefully considered all your alternatives and you have decided to go bankrupt voluntarily, you need to complete a Statement of Affairs and a Debtor's Petition. You need to compile a list of all your creditors which includes their name, address and the amount that you owe them. You have to declare all the debts that you are personally liable for.

You must make a list of all your assets like a house, shares, bank accounts, cars and any debtor amounts that are outstanding to you. Failure to disclose income or assets carry very serious penalties. Penalties, including imprisonment, can also be imposed if you unlawfully dispose of any assets. You become bankrupt once the forms have been accepted by the Official Receiver in Bankruptcy.

You will remain bankrupt for a period of three years from the date of filing of a statement of affairs. This period could be extended if the trustee you appointed or who was appointed on your behalf enters an objection. There are various actions that could prompt an extension of the period of bankruptcy from three to five or eight years.

Once you have filed for bankruptcy and it has been accepted, you will be relieved of all provable debts. These are debts which can be claimed for in your bankruptcy. Unsecured debts hold no lien over assets. If you have any debts that were guaranteed by another person, your creditors will have the right to claim the amount from the guarantor. Once the debt has been settled, the guarantor will be able to lodge a claim in your bankruptcy for the amount paid.

If you own a home which carries a mortgage loan, the lender could sell the asset if you are unable to continue with the mortgage payments. If there is a balance on the account after the sale, this will appear as a debt in your bankruptcy. If there is a surplus after the sale, the funds will be paid to your trustee for distribution.
There are other important factors related to becoming bankrupt. It is best that you consult with a professional who can assist you with more details and solutions to your problem. If you need help