Bankrupcy query

flogen

Could someone tell me what going bankrupt actually means. I assume its more than just 'running out of money' or something along those lines, so what does it entail?? I also understand that for whatever reason you have to pay a fee to be announced as bankrupt,
so if I had a company, what would the situation need to be and what would happen if I 'went bankrupt'??

Flogen

Victor

Bankruptcy is the extreme of insolvency and means you materially need to pay more now than you can pay now and there is no prospect of repaying in the near future*. As best I know it can only be declared by or in front of a court. Being bankrupt has serious consequences if you ever want to get a loan or credit of any kind and disbars you from certain occupations. It is not worth considering for a few thousand euros. The bankruptcy judgement can be held over you for 12 years and will stay on your credit record for longer. Breaching a repayment schedule set by a court could see you end up in prison.

* This obviously excludes say a mortgage that only needs to be paid over the next 20-30 years.

seamus

Actually, I've always been curious about this. If you declare bankruptcy, does the court order that all outstanding debts are written off, or does it just freeze your debtor's claim on you until you reach a certain level of solvency? For a company (ie it's gone, will never be restarted), I assume the former, but with an individual (who's probably going to make some money in the future), I assume the latter, but I've always been curious.

Victor

As best I know the judgement can be enforced at any time during the twelve years when you have more than a minimum income (the court won't force you to starve).