What are the pros and cons? Can they default on the loans that they’ve taken?
In: Economics
The person/company who owes is essentially saying they are unable to meet their debt obligations. A trusted third party helps them manage selling off assets and paying creditors what they can. Sometimes there is a structured payment arrangement for a while after declaration but before the bankruptcy procedure is complete. After that is done any remaining amounts owing are zeroed.
Pros: Debt can be removed without being fully repaid. Can allow a “fresh start” if the situation is dire.
Cons: Will be difficult to access reasonable credit for years afterward. Debtor has to sell most assets. Social stigma.
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