I’ve been watching documentaries on bailiffs recently and a lot of people file for bankruptcy due to having no assets etc. How does it work for those in debt, and what happens to their debts?
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Bankruptcy is a legal process where a person or business declares they are unable to pay their debts and seeks protection from creditors. A court-appointed trustee manages the person’s assets and pays off debts, with the person receiving a discharge of most debts. However, this discharge will have a negative impact on the person’s credit score for up to 10 years and can limit their ability to obtain credit in the future. Assets may be sold to pay off creditors, and certain types of debts, such as student loans or taxes, may not be dischargeable. Bankruptcy should be considered a last resort and other options for managing debt should be considered first.
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