When can someone file for insolvency petition
7 months ago
My dad currently has 50 lakhs in debt. Which he can't pay anymore. One of my friends suggested that I ask him to file insolvency petition. So I did.
He said it's only possible if he can't pay those emis for a few months. If he does that, the recovery agent will call and harass all his contacts. So he takes loans to pay emi.
But he have zero income and has to pay 1.5 lakh per month in emi. Is it possible to file for insolvency petition instantly without waiting for few months or the harassment from creditors?
A.Dear Client,
In India, the insolvency and bankruptcy process is governed by the Insolvency and Bankruptcy Code, 2016 (IBC). To initiate insolvency proceedings under the IBC, the debtor (in this case, your father) typically needs to meet certain criteria:
Default: Your father must be in default on his debt obligations. This means that he should have missed payments for a certain period, typically a few months, depending on the terms of the loan agreements.
Minimum Debt Threshold: There is a minimum debt threshold required to initiate insolvency proceedings under the IBC. As of my knowledge cutoff date in September 2021, the threshold was set at ₹1 lakh. However, this amount may change, so it's important to verify the current threshold.
Demonstrated Inability to Pay: Your father must demonstrate that he is unable to pay his debts. This can be through financial statements, bank statements, and other relevant financial documents.
Application to the National Company Law Tribunal (NCLT): The insolvency process is initiated by filing an application with the National Company Law Tribunal (NCLT) or the Debt Recovery Tribunal (DRT), depending on the type of debt involved.
Regarding the harassment from creditors, it's important to note that the IBC includes provisions to prevent harassment by creditors once insolvency proceedings are initiated. Once the application is admitted by the NCLT or DRT, an automatic stay is put in place, preventing creditors from pursuing recovery actions against the debtor.
Thank you.
In India, the insolvency and bankruptcy process is governed by the Insolvency and Bankruptcy Code, 2016 (IBC). To initiate insolvency proceedings under the IBC, the debtor (in this case, your father) typically needs to meet certain criteria:
Default: Your father must be in default on his debt obligations. This means that he should have missed payments for a certain period, typically a few months, depending on the terms of the loan agreements.
Minimum Debt Threshold: There is a minimum debt threshold required to initiate insolvency proceedings under the IBC. As of my knowledge cutoff date in September 2021, the threshold was set at ₹1 lakh. However, this amount may change, so it's important to verify the current threshold.
Demonstrated Inability to Pay: Your father must demonstrate that he is unable to pay his debts. This can be through financial statements, bank statements, and other relevant financial documents.
Application to the National Company Law Tribunal (NCLT): The insolvency process is initiated by filing an application with the National Company Law Tribunal (NCLT) or the Debt Recovery Tribunal (DRT), depending on the type of debt involved.
Regarding the harassment from creditors, it's important to note that the IBC includes provisions to prevent harassment by creditors once insolvency proceedings are initiated. Once the application is admitted by the NCLT or DRT, an automatic stay is put in place, preventing creditors from pursuing recovery actions against the debtor.
Thank you.
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