Question

Thoughts on Bankruptcy Law? Is it appropriate to have a legal mechanism in place whereby legally acquired debt is able to be eliminated through the legal process? What are the pros and cons of this concept from the standpoint of the creditor and the debtor?

Answer 1

Yes. It is appropriate.

The pros and cons from the standpoint of the creditor and debtor are as follows:

Advantages	Disadvantages
Filing for bancruptcy will prevent creditors from taking action to collect their debts, prevent creditors from repossessing propery such as cars including calling , suing and aggressive collection action. In short, automatic stay is triggered and can get more time	Some debts may become non dischargeable Once filed, a similar cannot be filed for some years depending on law
Can Make old tax liabilities go away	Tax refunds may be denied
Credit score downgradation can be controlled as missed debt payments, defaults, repossesions are put on stay	Ability to obtain a mortgage or loan may be hindered Exisiting credit facilities may be cancelled Credit score may be impacted for the coming 5-8 years
The process of rebuilding of credit can be started much sooner	Bancruptcy may impact reputation in the market as well as hamper your job prospects May impact key positions taken in other organisations
Bancruptcy exemptions allow to go through the process with losing any of the personal property	In case personal property is not exempted then possibility some of the property may be seized by the court and sold to pay your creditors