Filing for bankruptcy is not a very common practice in India, but it can be a good option for those who are heavily indebted and see no chances of repayment in near future. Although the Indian society is insensitive towards those who file for bankruptcy, it certainly opens up a window for starting afresh. It additionally helps you avoid continuous chasing by creditors.
An individual filing for bankruptcy legally declares that he is not in a position to service his debt obligations. The status of being ‘bankrupt’ relieves debtors from the legal obligation of debt payment to creditors.
Steps to file for bankruptcy as an individual
If you’re in a money mess and your liabilities are too high as compared to your assets, filing for bankruptcy can act as a restart button. It will give an honest and burden-free start to your life as you will be relieved from all the debts. If you propose to file for bankruptcy, you’ll need to consider these steps:
- File a petition with the National Company Law Tribunal.
- Â Following which an insolvency professional takes control of the defaulting company and assists the process
- Â A creditors committee is formed that looks into the interests of lenders and other parties involved
- Â A time period of 180 days is given to find a feasible solution of the default issue
- The timeline can be extended by another 90 days, but if the matter goes beyond 270 days, a liquidator is appointed
- The defaulter or the defaulting company can also opt for voluntary liquidation
