BANK­RUPTCY

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“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.

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