Bankruptcy filings can work both ways.
The growing anticipation of a credit squeeze in the United States as well as a sharp increase in the number of bankruptcy filings already taking place, have brought increased attention amongst the many individuals who fear that they too may be joining the list of those that may find themselves taking this unfortunate step. A step which is usually a last resort for most people. Although recent legislation has created a more forgiving attitude toward people who instigate bankruptcy filings, no one should go into this procedure expecting that it will be easy and that their creditors will understand and even sympathize. Larger companies are aware of how to protect themselves, and may well have bankruptcy insurance. However smaller companies and individuals who are creditors will usually never have considered this option and the damage caused to them may have far reaching implications.
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The principal of bankruptcy filings was originated to help people who had fallen upon financial hard times, and in many cases through no fault of their own. Usually the courts would bend over backwards to help these people and in turn to help their creditors, who might have been unable to absorb such a bitter financial blow. In recent years, as the financial bubble grew and grew and credit was easier and easier to find, more less scrupulous individuals began to callously take advantage of the easy credit dished out, especially banks and finance companies. Whilst on the positive side very few small privately owned companies fell victim to this form of callous abuse of the system. The banks and finance companies who lost capitol, simply recovered their losses through increasing their interest rates. This obviously caused a knock on effect as far as the innocent public at large was concerned.
Leading economists have stated that this factor has become a significant one in the recent financial crisis in the United States, as well as the United Kingdom.
Companies and individuals who have begun to face up to the prospect of bankruptcy filings should be well aware that the laws are a lot less flexible than they once were. The best piece of advice anyone can receive in this position is to consult an insolvency lawyer and if they have sufficient funds available for the appointed lawyer to guide them through the entire insolvency process then all the better. One thing for sure is that no one should appear in court under the impression that the court will be sympathetic to them. If the court feels that the debtor has placed his own interests before that of his creditors, the consequences could be very difficult for them. Only an experienced lawyer will be capable of providing objective advice on the matter.
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