India has stridden a step closer to approving a new bankruptcy after Lok sabha ratified the legislation on the fifth of May, so what is this new bankruptcy law? The new bankruptcy law will provide a time-bound framework to resolve insolvency and help investors make a faster exit from bankrupt companies or help in engineering or turn around. Bankruptcy is a legal status imposed by a court on a person or business that is unable to repay debts the bill proposes to set up the insolvency and bankruptcy board of India to act as a regulator for these utilities and insolvency law firms ensuring this speedy liquidation at present it takes more than four years to resolve bankruptcy in India. The court seeks to reduce this time frame to less than a year. Bankruptcy applications will now, bring into the world to be classified within three months fairly than the first six months.

Why is it important?

It is authorized by Rajya Sabha and the law will guarantee time intended territory of insolvency to enable faster procedure for companies and create a database of serial bankruptcies. This is all critical to unraveling India’s bad debt dilemma which has paralyzed bank lending. It will motivate investors to invest in India as they can now recover debts faster through Bankruptcy Professionals in India. The achievement of the law will also expand India's responsibility in the world bank's accomplishing a business ranking. It also provides for the creation of information utilities that will collate all information about debtors to prevent serial reporters from misusing the system.
Why should you care? The bill aims at promoting investments freeing up banks resources for other productive users and boosting credit markets. Bankruptcy law except for that business ventures can fail and allow entrepreneurs to get a fresh start. It will encourage more investors to invest more in entrepreneurs to set up the businesses and make access to credit easier given the fixed time frame for resolving insolvency. The new norms have given new hope to the industry especially to Bankruptcy lawyers in Delhi who will now have a faster framework for the resolution of cases.

Pros and Cons of Bankruptcy:

Pros- eliminates your debts such as credit card, payday loans, tax debts, certain student loans. Creditor protection stops collection calls and stops wage garnishment. Debt-free in nine months with a fresh start.

Cons- loss non-exempt assets. Monthly payments are based on incomes and duties like making payments, credit counseling, monthly statements should be done on time. Note on credit reports like secured credit cards, prepared credit cards, visa debit. Some debts don’t include bankruptcy-like court fines or alimony and child support or government guarantee student loans if you have been out of school for less than seven-year.

Conclusion:

When an individual is unable to pay off his liabilities and debts then he files for bankruptcy and then he asks the government to pay off his debts to the creditors. This bankruptcy has two types: the first one is reorganization bankruptcy which is an extension of repayment term within the time limit and the second, liquidation bankruptcy is used to feel assets to pay off the loans to the creditor.