What does it mean when someone declares bankruptcy?
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Basically you make a legal declaration that you cannot pay the money you owe to the people it’s owed, even if you sold all your assets and neither are you able to service that debt on an ongoing basis ( ie your income is not enough to make the payments being demanded).
Exact rules vary depending upon where you are but generally the court will take control of your assets and income and come to arrangement with your creditors as to how much you should pay back and on what schedule. You will havecto justify any expenditure over and above a certain amount needed to live an everyday life ( ie you’d be allowed a basic car but no Ferraris)
Because in general your creditors will have to accept less than you actually owe them the consequence fir you is that it significantly affects your ability to obtain credit for a period of time. It can also affect your ability to do certain types of employment too.
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