The issue of bankruptcy has existed in human civilizations for a long time. In ancient Greece, the only person who could own property was an adult male who had been born locally. If this individual was unable to pay his debts, his wife and children could become debt slaves for a maximum of five years to repay the debts. Obviously very few ancient Greeks would want to take on large debt loads under these conditions.
The fundamental cause of bankruptcy is that the cost of repaying debts has become too large in comparison to the income that the debtor has available to pay debts. This can be the result of a number of issues; including a high cost business venture, such as a restaurant, a market that changes direction, such as the end of a building boom, or simply an overly optimistic assumption about repayment possibilities by the debtor. The debtor may still have the means to discharge most of the debt, just not all of it.
A number of modern democracies have developed alternative approaches to resolving the bankruptcy issue outside of the more formal bankruptcy proceedings. In Canada, there is the Consumer Proposal that covers debt between five and seventy five thousand dollars. In the U. K. there are Individual Voluntary Arrangements.
The actual method by which bankruptcy is resolved may vary from country to country, but the basic approach has many similarities. Basically the individual declaring bankruptcy surrenders control over a large part of their assets to an objective third party, in this case the bankruptcy court, in order to find another way to pay off an overwhelming debt load. Unfortunately for the creditors, they will most likely receive only a portion of what was originally owed to them.
Most modern democracies have a more enlightened approach to viewing bankruptcy than may have existed in the past; bankruptcy is not necessarily a sign of poor character or an unwillingness to discharge debts. As a result of this more modern viewpoint, the potential for a bankrupt individual to recover and once again enjoy home ownership or credit is much greater. Some lenders even specialize in lending to previously bankrupt individuals. A good place to search for these lenders is on the Internet.
Going through bankruptcy proceedings is not an activity that most people would consider pleasant, but it may be necessary to control an increasingly overwhelming debt situation. If you are faced with the difficult choice of declaring bankruptcy yourself, or waiting for your creditors to bring bankruptcy proceedings, you may prefer a course of action where you at least feel some control. The best approach is always to be well informed about your possible strategies and options.
