Being declared a bankrupt may be a difficult process for everyone involved, not just the bankrupt but also the people closest to him. As such it is necessary for a person in that situation to find the best way to recover from those circumstances in the quickest and least painful way possible. Moving on after a bankruptcy may be difficult but here are some tips that may help you if you are ever unfortunate enough to be in that situation.
(a) Know the effects of bankruptcy
Before you can decide how to remedy the situation or make the best of it, you need to know exactly what being a bankrupt entails. Each jurisdiction may have differing effects of bankruptcy. For example, in some jurisdictions, a bankrupt may not be able to leave the country without prior approval from the insolvency department. This may have an impact on what sort of steps you can take after bankruptcy – for example, trying to obtain business out of the jurisdiction may become difficult and not practical.
(b) Know what you have to do
In most jurisdictions a bankrupt will be required to report any income exceeding a certain threshold, to the relevant authority (usually the state’s insolvency department). This is because aside from living expenses, most of income generated must go to the creditors according to priority, or divided according to insolvency law. Therefore you will need to recognise what you are required to do once you are a bankrupt. If you need help, most officers at the insolvency department will be happy to assist you.
(c) Manage your finances
This may sound straightforward but it is something that most people forget. Instead of wallowing in depression, find a way to rebuild your finances and your reputation so that you can take the appropriate action to discharge yourself as a bankrupt. Remember, study the insolvency laws of the regime that governs you so that you understand the limits and what it is that must be done before you can discharge yourself as a bankrupt. Usually you will have to satisfy the insolvency authority that you are now in a position to fully satisfy your debts to the creditors. Be careful about making deals with creditors without notifying the relevant authority as this could be deemed void as an undue preference to a particular creditor. As usual, if you are not sure, do not be afraid to enquire.