Bankruptcy Basics

Bankruptcy is a dreaded word, which can give goose bumps of almost every individual who hears it and even a nervous breakdown to those who confront it. Bankruptcy stands for the situation when a person runs into huge debts and there is hardly any money left with him to repay those debts. The clouds of bankrupt situation can hover over anybody’s life be it a successful business man who has never ever fathomed it, or any greenhorn entrepreneur who had thought of going a long way ahead.
There are several reasons behind this insolvency.
Indebtedness-people usually take big loans from the banks and private companies in order to run successfully their business or company. However, since the economy is constantly fluctuating, one might not be able to incur expected results or profits. So, the loan debt with interest rates gets piling on. The loan can also be taken to pay off a bill that you missed paying. The loan is taken instantly in this case without an assessment of the interest rates. This can be cause snags later.
The credit card bills are also a source of trouble. They are charged with good interest and at the end of the month when the expenditure has chewed your month’s income; the credit card bill can make you bite the dust.
In the world today where fraud and betrayals are considered to be the bets virtues, any partner or shareholder or director might connive to pitch the company or business to bankruptcy. Here the reasons can be mutual squabbles and vengeance.
Gradual denouncement from the market- the commodity you sell today at price X, may be sold tomorrow by some other company at a much cheaper price Y. This can oust or eject your product from the market replacing it with a relatively cheaper one. Continue reading