Bankruptcy
A formal procedure for individuals who cannot pay their debts, where a trustee administers the person's affairs for the benefit of creditors.
What bankruptcy is
Bankruptcy is a formal process that applies to individuals, not companies, who are unable to pay their debts. A trustee is appointed to take control of the bankrupt person's affairs, deal with certain assets, and distribute any available funds to creditors. Bankruptcy can begin when a person applies themselves or when a creditor takes the necessary steps through the courts.
Effect on creditors
Once a person is bankrupt, most unsecured creditors generally cannot continue separate recovery action and instead share in any distribution the trustee makes. The bankrupt is usually released from many debts at the end of the process, subject to the rules. This is general information only and not legal or financial advice. If an individual debtor may be bankrupt, you can refer a debt for guidance.
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