What Happens in Bankruptcy?

Video Transcript

"This is financial advisor, Patrick Munro, discussing what happens in bankruptcy. Bankruptcy's a very unpleasant legal term that happens when a creditor, really cannot pay his debtors. Because of an emergency, medical crisis, or his cash flow is cut off for one reason or another. Eventually, it becomes a situation where he has to declare bankruptcy. It's a process that has to be filed with an attorney, all the creditors are notified, and normally they have to settle for pennies on the dollar, for the gross amounts of the debts that are owed to them, by this creditor. Under the new bankruptcy laws, however, these creditors have a unlimited amount of time really, to pursue this creditor. If his affairs turn better, and his fortunes change, he must be responsible, ultimately to pay back those debts. That is different from the old laws, where the bankruptcy was charged off, as it's termed in the world of financial affairs. This is Patrick Munro, discussing bankruptcy."