Bankruptcy of an individual
For many people, “Bankruptcy” is associated with one’s life being ruined, this feels almost like it is the end of the world. Yes, clearly, there’s little good here, yes, it’s very hard, but even in this situation, if one acts and doesn’t bury his head in the sand, there is a way out! Unfortunately, in today’s world, there are many cases where individuals or firms find themselves in debt and have no ability to pay them. These debts can be to individuals, suppliers of goods, municipality etc. Therefore, the legal system provides a number of procedures which are meant to help people to resolve such problems. The state needs prosperous tax payers and it’s much more profitable for the state to help the debtor solve his problem, so they can start a new life without debt and according to the law and rules of life in the state.
One such procedure of “rehabilitation” is the procedure of bankruptcy.
The process of bankruptcy
The point in the procedure of bankruptcy is debt erasure. We have recently been receiving many applications from clients who are interested in the process of debt erasure, but do not have the will to hear about bankruptcy. Here, it’s important to clarify: there is no such juridical concept as “debt erasure”. Debt erasure is another (popular) name for the procedure of bankruptcy.
The procedure of bankruptcy applies to:
- Organizations (firms, companies)
However, it’s not all that simple. In this article, we will tell you about what actually happens in the procedure of bankruptcy or debt erasure.
Bankruptcy – How does it work?
First of all, the procedure of bankruptcy applies only to individuals or organizations that have found themselves in debt and not through malicious intent. It’s important to say, that there are fraudsters who use the procedure of bankruptcy for their own self-enrichment. That’s why the court carefully studies the circumstances which have led to the debts.
Secondly, the court studies the assets of the debtor that wants to erase his debts. Here are the options:
- If the debtor has no money and he can’t pay his debts on time, but he has assets, which can be monetized, so the options are:
- Monetizing (selling) these assets and paying the creditors off. In this situation, the benefit for the debtor is that he gets a great postponement of payment to his creditors. But, of course, he loses all or some of his assets.
- In some cases, even while owning assets, there is possibility of avoiding the procedure of bankruptcy and keeping the assets: there are other ways of getting to an agreement about the debts, such as consolidating the case at the execution office, arrangements with the creditors etc.
- The debtor has no money and no assets (no real estate, no car etc., which could be monetized), and the court sees that he really cannot pay the accumulated debts within 4/5 years. Then, the procedure of bankruptcy is the best solution.
In any case, it’s very important and best to consult with an experienced bankruptcy lawyer who specializes in debt erasure, as soon as possible.
Of course, you can go online, find plenty of information about this subject and act all by yourself; but where is the guarantee of you choosing the right strategy, doing all of the necessary legal actions correctly (submitting an application correctly to court, preparing and attaching the needed documents and presenting yourselves in court in a convincing, short and argumentative manner in court). Are you sure? And what if you go wrong somewhere and the court denies your application? So not only will you not solve the problem, lose time and make your family nervous, but you will also make matters worse (as the debt will keep growing because of increasing interest rates). So why take the risk?
Bankruptcy and debt erasure lawyer, already in the first stages, works with you on:
Abolishment of prohibitions and limitations, if such were applied to you, also, abolishing of prohibition of additional debts during the bankruptcy procedure etc.
The receiving of the procedure of external management, which will set a more acceptable (lower), according to your economic abilities, monthly mandatory payment to the external management fund – Convening order (usually from 150 to 1,000 shekels).
In addition, the lawyer will help you write and submit, once every two months, a report of income and expenses, and take other statutory actions within the framework of the bankruptcy procedure (case consolidation in the execution office, agreements with the creditors etc. – depending on the strategy you chose to bring into action).
A hearing in court is usually set after 18 months.
The court’s decision, in most cases, depends on the work on your application (whether by yourselves or with the help of a lawyer), for the past year and a half. With a positive answer from the court, as it usually happens when a professional bankruptcy and execution lawyer is involved, a person, gradually (depending on the situation) gets rid of the burden of debts and starts a new page in his life without any debt.
This is the procedure of bankruptcy or debt erasure in a nutshell.
We know what people are going through in these situations, and we adapt our services according to every specific case.
We will be glad to assist you.
Turn to: Bankruptcy lawyers’ office of Miskevich & Co.
* The above given article is by no means, juridical consultation and only reflects some aspects about the procedure of bankruptcy of an individual in Israel.