If you are dead broke and have an overwhelming debt which is impossible to pay off, this will be what you wish for; to somehow erase everything and have a fresh start. Well, life doesn’t work that way where you drink a magic potion and ta-da!!… You are born again and are making wise decisions. But if you are that desperate, you can consider something that can actually make you financially reborn; bankruptcy.
What Is Bankruptcy
Bankruptcy is a form of insolvency where the debts you can’t afford are written off through legal process. It is a legally granted financial rebirth for those who can’t pay off their debts by any means within a given time. You can file a petition to court to release you from debt and when it’s granted, you can start over with a clean financial slate. Apart from you, the person who you owe money to also can file a petition to make you bankrupt, with or without your consent.
It is generally considered as a last resort to escape from debt, and it has both advantages and disadvantages.
How It Works?
The bankruptcy procedure in UAE is different for individuals and companies. Insolvency of individuals comes under the federal decree law on the insolvency of natural persons and the bankruptcy of companies comes under the federal bankruptcy law 2016.
Insolvency of individuals
The federal law on insolvency of natural persons offers 2 ways to solve their financial contingency; you can agree to a repayment plan proposed by the court appointed expert, or can liquidate all assets to repay creditors. First, you should file a petition to the local court to be declared insolvent. For that you must have missed repayments in the last 40 years or must be going to miss one. After submitting the necessary documents to prove your financial condition, the court will make a decision within 5 working days.
Bankruptcy of companies
The bankruptcy law of 2016 is a modern version of insolvency law. It is basically for firms and companies which are broke and fail to pay off liabilities. The law provides various options for the debtors and creditors to consider protective mechanisms like preventive composition and restructuring. If none of this works out bankruptcy is granted as the last resort.
You can consult and ask for bankruptcy advice from a debt service provider or settlement agency to decide on the possibilities.
How This Effects?
The main advantage of bankruptcy is the permanent release from the revolving debt and the never ending stress and tension related to them. Other positive effects are;
- Independence from credit and creditors
- Can stay out of possible legal actions for not repaying debt
- Wipes away all liabilities and start afresh
- Possibility to reopen your business on favorable conditions.
- Allows a second chance
Surely it will give you a new start, but by new, it means literally starting from 1. There are some disadvantages in choosing bankruptcy. They are,
- Effects your credit score for a long time
- Possibility of rejection and accusation for fraud
- You won’t be granted any loans or finance in the future
- Assets like vehicles and house may be included in bankruptcy
As said above, depend on bankruptcy only if there are not any other options to consider. It is taken as the last resort, when nothing else would work out. Because by starting afresh, you are not only losing your liabilities, but also your assets in possession. You can consider some other options before deciding on bankruptcy like;
- Debt consolidation loans: debt relief loans provided by debt consolidation agencies. It is one loan for all debts method.
- Debt management: The debt management companies work on your behalf with your creditors to reduce your monthly payments and avoid penalties. The plan groups your credit card debts into one and creates a well structured 3-5 year repayment plan by reducing interest rates.
- Debt settlement: if nothing works, settle your debt once and for all by a significant amount which will be less than the actual debt. You can hire a debt settlement company to negotiate with your creditors on your behalf and settle your debt effectively,
Wethinksolutions is a debt consolidation agency in Dubai. We offer debt management services like debt settlement and debt management plans. From helping you with our responsible short term debt relief loans to effective bankruptcy advice, we are the answer for everyone in need. We provide the perfect bankruptcy advice in Dubai.
For more details, visit www.wethinksolution.com