Insolvancy
2 months ago
I am 28 years old, i have a debt of 45000 in unsecured loans and credit cards, my income is only 10000, am i eligible for insolvancy, how long the procedure will take
A.Dear client,
As per the Insolvency and Bankruptcy code, Individual Insolvency in India and Bankruptcy with a default amount of at least Rs. 1,000 are covered in Part III of the Code. If the conditions are satisfied, a debtor who is unable to pay their debt may apply for a fresh start and the discharge of their eligible debt to the adjudicating authority (AA), either directly or through a resolution professional (RP). You should produce the annual gross income, and total value of the debtors asset, and there is no other bankruptcy claim going on. The full timeline of a Member's Voluntary Liquidation (MVL) takes around six months to a year to complete, but this depends on the complexity of the business.
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As per the Insolvency and Bankruptcy code, Individual Insolvency in India and Bankruptcy with a default amount of at least Rs. 1,000 are covered in Part III of the Code. If the conditions are satisfied, a debtor who is unable to pay their debt may apply for a fresh start and the discharge of their eligible debt to the adjudicating authority (AA), either directly or through a resolution professional (RP). You should produce the annual gross income, and total value of the debtors asset, and there is no other bankruptcy claim going on. The full timeline of a Member's Voluntary Liquidation (MVL) takes around six months to a year to complete, but this depends on the complexity of the business.
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A.Dear Client,
Under the Provincial Insolvency Act, 1920 (which is now repealed as IBC Code 2016), you can file for bankruptcy if you are unable to repay a debt greater than ₹500. After analyzing whether the conditions for filing for bankruptcy have been met, the court may accept or reject the application. But, in the absence of any property/assets, your insolvency petition may be rejected by the Court. Alternatively, you can try to negotiate a debt settlement on your own if your pocket permits to repay the entire outstanding at a time for a one-time settlement of dues, but sometimes it's typically done through third parties like debt relief companies, which you may hire to negotiate the settlement matter with the lender on your behalf. With this method, you will make payments to the debt settlement company rather than your creditors/lenders, along with any fees. Debt settlement is an agreement between a lender and a borrower in which the borrower repays a portion of a loan balance and the lender forgives the remainder. You may consider starting the negotiation by offering to pay 25% or 30% of your outstanding balance in return for forgiveness on the rest. But, it may be noted that while there are legitimate debt relief/settlement companies, there are also many scam operations. So, if you're considering one, the Consumer Financial Protection Bureau(CFPB) suggests for contacting your state attorney general's office and local consumer protection agency to ask if they have any consumer complaints on file about that company. Some states require that debt settlement companies be licensed, which may provide some added protection. Although a debt settlement can offload some of your financial crisis, there are also a few potential risks and downsides to consider. First, a debt settlement will affect your credit score. That will make it more difficult for you to get credit or good interest rates in the future. Another potential drawback is that when you settle debt, you could face tax consequences. Finally, when you settle a debt with a credit card company, your account is closed once the settlement is complete. So you could potentially have no credit facility to use a credit card further owing to your poor credit score. Further, a quick counselling session with a certified credit counsellor can help you to discover your options and choose the right path forward to settle the debts/loan with the Bank.
Under the Provincial Insolvency Act, 1920 (which is now repealed as IBC Code 2016), you can file for bankruptcy if you are unable to repay a debt greater than ₹500. After analyzing whether the conditions for filing for bankruptcy have been met, the court may accept or reject the application. But, in the absence of any property/assets, your insolvency petition may be rejected by the Court. Alternatively, you can try to negotiate a debt settlement on your own if your pocket permits to repay the entire outstanding at a time for a one-time settlement of dues, but sometimes it's typically done through third parties like debt relief companies, which you may hire to negotiate the settlement matter with the lender on your behalf. With this method, you will make payments to the debt settlement company rather than your creditors/lenders, along with any fees. Debt settlement is an agreement between a lender and a borrower in which the borrower repays a portion of a loan balance and the lender forgives the remainder. You may consider starting the negotiation by offering to pay 25% or 30% of your outstanding balance in return for forgiveness on the rest. But, it may be noted that while there are legitimate debt relief/settlement companies, there are also many scam operations. So, if you're considering one, the Consumer Financial Protection Bureau(CFPB) suggests for contacting your state attorney general's office and local consumer protection agency to ask if they have any consumer complaints on file about that company. Some states require that debt settlement companies be licensed, which may provide some added protection. Although a debt settlement can offload some of your financial crisis, there are also a few potential risks and downsides to consider. First, a debt settlement will affect your credit score. That will make it more difficult for you to get credit or good interest rates in the future. Another potential drawback is that when you settle debt, you could face tax consequences. Finally, when you settle a debt with a credit card company, your account is closed once the settlement is complete. So you could potentially have no credit facility to use a credit card further owing to your poor credit score. Further, a quick counselling session with a certified credit counsellor can help you to discover your options and choose the right path forward to settle the debts/loan with the Bank.
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A.Dear sir
Section 10 in The Provincial Insolvency Act, 1920
10. Conditions on which debtor may petition.—
(1) A debtor shall not be entitled to present an insolvency petition, unless he is unable to pay his debts and—
(a) his debts amount to five hundred rupees; or
(b) he is under arrest or imprisonment in execution of the decree of any Court for the payment of money; or
(c) an order of attachment in execution of such a decree has been made, and is subsisting, against his property.
(2) A debtor in respect of whom an order of adjudication 1[whether made under the Presidency-towns Insolvency Act, 1909 (3 of 1909), or under this Act has been annulled, owing to his failure to apply, or to prosecute an application for his discharge, shall not be entitled to present an insolvency petition without the leave of the Court by which the order of adjudication was annulled. Such Court shall not grant leave unless it is satisfied either that the debtor was prevented by any reasonable cause from presenting or prosecuting his application, as the case may be, or that the petition is founded on facts substantially different from those contained in the petition on which the order of adjudication was made.] State Amendments Himachal Pradesh.—Same as in Punjab. [Vide Himachal Pradesh Act 31 of 1976, sec. 3 (w.e.f. 1-4-1979).] Madhya Pradesh.—In section 10, in sub-section (1), in clause (a), for the words “five hundred rupees”, substitute the words “two hundred rupees”. [Vide C.P. Act 2 of 1936, sec. 2 read with M.P. Act 23 of 1958, sec. 3(1).] Punjab: Haryana: Chandigarh.—In section 10, in sub-section (1), insert after clause (a) the following clause namely:— “(aa) his debts amount to two hundred and fifty rupees, and he satisfies the Court that he is entitled to summary administration of his estate under section 74 of this Act; or” [Vide Punjab Act 7 of 1934, sec. 3 (w.e.f. 19-4-1935) read with 30 of 1958, sec. 4(1); Act 31 of 1966, sec. 88.] COMMENTS Adjudication as a matter of right If all the conditions of the section are satisfied, then the debtor is entitled to the order of adjudication as a matter of right and the same cannot be refused by the Court; K.R.K. Krishnappa Chettiar v. V.V.R. Kasiviswanathan, AIR 1966 Mad 331. Burden to prove The burden to prove that all the conditions of section 10 are satisfied is on the debtor; Siya Ram v. Bohra Kishori Lal, AIR 1933 All 841. Debt: Meaning of Under section 10, there is no need for more than one debt. The word “debt” means and includes a ‘single debt’; S. Damodaran Pillai v. K. Nanthedu Bava, AIR 1992 Ker 212. Res Judicata If the first petition is dismissed because the evidence could not be produced, the principle of res judicata will not apply to it; Hasan Din v. Kirpa Ram, AIR 1928 Lah 374. Second order If a person has been declared as an insolvent, he cannot apply for a second order of adjudication until he has been discharged from the first order or the order has been annulled; Ram Das v. Sultan Husain Khan, AIR 1929 Oudh 149. What debtor has to prove Under section 10, debtor must prove that he is not able to pay his debts, in order to be adjudicated as an insolvent; Bonagiri Yellalu v. Nagulavaram Chenchu Subbaiah, AIR 1972 AP 221.
Section 10 in The Provincial Insolvency Act, 1920
10. Conditions on which debtor may petition.—
(1) A debtor shall not be entitled to present an insolvency petition, unless he is unable to pay his debts and—
(a) his debts amount to five hundred rupees; or
(b) he is under arrest or imprisonment in execution of the decree of any Court for the payment of money; or
(c) an order of attachment in execution of such a decree has been made, and is subsisting, against his property.
(2) A debtor in respect of whom an order of adjudication 1[whether made under the Presidency-towns Insolvency Act, 1909 (3 of 1909), or under this Act has been annulled, owing to his failure to apply, or to prosecute an application for his discharge, shall not be entitled to present an insolvency petition without the leave of the Court by which the order of adjudication was annulled. Such Court shall not grant leave unless it is satisfied either that the debtor was prevented by any reasonable cause from presenting or prosecuting his application, as the case may be, or that the petition is founded on facts substantially different from those contained in the petition on which the order of adjudication was made.] State Amendments Himachal Pradesh.—Same as in Punjab. [Vide Himachal Pradesh Act 31 of 1976, sec. 3 (w.e.f. 1-4-1979).] Madhya Pradesh.—In section 10, in sub-section (1), in clause (a), for the words “five hundred rupees”, substitute the words “two hundred rupees”. [Vide C.P. Act 2 of 1936, sec. 2 read with M.P. Act 23 of 1958, sec. 3(1).] Punjab: Haryana: Chandigarh.—In section 10, in sub-section (1), insert after clause (a) the following clause namely:— “(aa) his debts amount to two hundred and fifty rupees, and he satisfies the Court that he is entitled to summary administration of his estate under section 74 of this Act; or” [Vide Punjab Act 7 of 1934, sec. 3 (w.e.f. 19-4-1935) read with 30 of 1958, sec. 4(1); Act 31 of 1966, sec. 88.] COMMENTS Adjudication as a matter of right If all the conditions of the section are satisfied, then the debtor is entitled to the order of adjudication as a matter of right and the same cannot be refused by the Court; K.R.K. Krishnappa Chettiar v. V.V.R. Kasiviswanathan, AIR 1966 Mad 331. Burden to prove The burden to prove that all the conditions of section 10 are satisfied is on the debtor; Siya Ram v. Bohra Kishori Lal, AIR 1933 All 841. Debt: Meaning of Under section 10, there is no need for more than one debt. The word “debt” means and includes a ‘single debt’; S. Damodaran Pillai v. K. Nanthedu Bava, AIR 1992 Ker 212. Res Judicata If the first petition is dismissed because the evidence could not be produced, the principle of res judicata will not apply to it; Hasan Din v. Kirpa Ram, AIR 1928 Lah 374. Second order If a person has been declared as an insolvent, he cannot apply for a second order of adjudication until he has been discharged from the first order or the order has been annulled; Ram Das v. Sultan Husain Khan, AIR 1929 Oudh 149. What debtor has to prove Under section 10, debtor must prove that he is not able to pay his debts, in order to be adjudicated as an insolvent; Bonagiri Yellalu v. Nagulavaram Chenchu Subbaiah, AIR 1972 AP 221.
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