“When a person is insolvent, meaning that they cannot pay their debts, they have the option of either declaring themselves, or allowing a person that they owe money to, to declare them bankrupt,” says Jeremy. “This option is really a last resort for someone who is in such a financial position that they simply cannot pay the money that they owe, and want a fresh start.”
If you operate a business as a sole trader or a partnership. A business itself doesn’t go bankrupt – the individuals who run it do. Debt collectors will then mostly stop contacting you. “Once you are declared bankrupt you have to provide a list of everything that you owe and own to your bankruptcy trustee,” he says. “They then use anything that you own, which is above what you need to survive and live, to pay your debts.”
Your career plans for afterwards. If you gain employment during your three-year bankruptcy, part of your wages can be directed to the trustee to contribute to your debt repayment. “Depending on what type of work you do and what government regulation applies, you may not be able to trade in your business or profession,” says Jeremy.
Lily. You may not have heard of the drone start-up because it filed for bankruptcy before launching, despite raising more than US$34.8 million in pre-orders for its camera drone. In March the company sent an email to more than 61,000 customers, with information about how they could request a refund. This came after they were sued by the San Francisco district attorney for misleading business practices, with their promotional video allegedly exaggerating the drone’s abilities.