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Indian Bankruptcy laws

I have been hearing again and again of people driven to suicide by loan collectors or in this peculiar news, defaulters killing their bankers.

But have you noticed one thing in common among all these defaulters…. NONE of them had filed for bankruptcy….WHY?

In a business losing money does not mean that you had embezzled funds.
80% of the business fail due to cash flow problems and those can be over come by talking to bankers to extend the loan, or with the help of a short term loan from friends and family.
rest of the business usually failed as a result of non conducive market scenario and is part of the learning process.

I agree that in traditional societies like India, being fired from the job or failure in your latest venture makes you the center of the town gossip… but who cares about the world… you have responsibility towards your family, your kids and killing yourself/banker does not solve the problem.
Try talking to your banker to extend the loan tenure, sell off some of the assets and see if you start over again… if you still cannot.. then don’t be shy, ask for help… you will be surprised to know it coming from unlikeliest of the places. Friends and family might help you because they know you are a good man. More often then not acquaintance often pinch in. Often its a pure business deal, where they pump in money in return of sale of assets/partnership… sometimes they do it because they have faith in your business skills and they know that this is a temporary phase.. in future you will not only succeed, but will be gratitudeous.

If nothing works, then don’t start your evasive tactics… Declare bankruptcy, take the assistance of the law and discharge your loans and live life honorably.

India has bankruptcy laws dating as old as 1874… and today’s law clearly demarcates the business/company’s assets from the personal assets… it distinguishes between the assets of the family and your assets and has all the features that allows you to write-off the loan once and for all and start again. Once you start the bankruptcy proceedings, the bank will audit you, you might be asked to visit the court/negotiation table a couple of times… but can no longer harass for the dues…

Lastly a quote from Rich Dad, Poor Dad
“Being Broke is temporary, but being poor is eternal”

 

street, Bengaluru South, Karnataka, India

38 replies on “Indian Bankruptcy laws”

But do u knw tht bankruptcy laws are used for the wrong purposes more often than not. I mean I knw half a dozen people who have named all their assets on the name of their wife/family and declared bankruptcy. They still do have lakhs, only the people who lended them get fooled. And life after declaring bankruptcy is probably not as honourable as you thought.

But as you said suicide is not an answer to anything, infact it shouldn’t be even an option. And yes ask for help and you will be pleasantly surprised.

thanks for dropping by…
actually this article is in reference to over a dozen separate incidents (primarily against ICICI Bank) where failed businessmen were harassed/manhandled and forced to suicide by strong arm tactics of the bank collectors.

bankruptcy laws r important to maintain the entrepreneurship spirit of the nation by making it easier for individuals to take risks, and try multiple times before they actually succeed. so making it iron clad would defeat the very purpose.

about misuse:
although people have misused it to get rid of the debt, a good auditor is more often than not, able to catch this. According to law, the person has to furnish complete details about the sale/transfer of assets, and where the money from the sales proceeds went. The deeds of transfer of assets through gifts are void and those assets can be seized by bank. but again the smart guy is always one step ahead of the audit firms and finds his way out.

nice one
i found this link after typing how to declare bankruptcy in india
but sir the previous link shows a discussion which states that filing bankruptcy isn’t easy
and that there are a lot of repercussions.

Hi:

I am glad I came across your website.

I would like to file for bankruptcy as I have lost my job and am unable to pay my debts.

I live in Mumbai.

Can you please guide me?

Thank you.

Regards.

Veena

Can you pls name a few legal aid center in Hyderabad,India who can offer me advise on Debt collection law and personal bankruptcy.

Hi

I Lost my steady job over one and half years ago, have been in two jobs over this period, however none of them were permanent and sustainable, I live in mumbai, my mom is a dialysis patient and I have exhausted all my financial resources, I have credit Card dues and though would like to pay them off dont know how, I have tried to speak to the bankers but it seems to be falling on deaf ears, I have now started a small software trading with a reputed company on commission basis but the returns are yet to come, meanwhile the credit card dues keep mounting, I cant help…
Please advise

Rajeev

@rajeev…
filing bankruptcy seems very tempting.. however before you start the procedure.. please give a second impartial look at your financials… if you believe u can pay off even 5% of your credit card dues every month.. then i would say that stay put… try liquidating your bonds/assets or even take a loan from the family and friends
however if your interest outgo exceeds your income.. then probably you should go ahead with bankruptcy.. however do keep in mind that for the next 3-5 years none of the financial institutions will ever touch you the moment you utter the B word

Ankur

Thanks for the prompt reply, I’d consider bost options, however I realy dont know how to proceed in the worst case scenario (Bankcruptcy), neither do I know any lawyers, I’m from northern mumbai (western line), so if you know some good advisors whom I could talk to, would help.

Thanks
Rajeev

Sir,

I have gone through your website. Now, I am really in fix. I want to give my bankrupcy notice where and how please tell me. I am from Chennai

I am glad to know that there are people who can still help me when i came across your site.

I would like to file for bankruptcy as I have incurred huge loss in business and lost my job too and i am unable to pay my debts. i have taken few personal loans and credit cards dues.

I live in Delhi. My condition is in worst condition. Hiding myself from bank and matters pending in lok adalat stage.
My financial condition is also not good. so please Can you guide me in this matter. Please advice my a lawyer in delhi so that i can file for bankrupcy.

Please also mention the total cost of filing bankrupcy as my financial position is not very good so have to arrange it.
Thank you.
Regards.

Punit

Hi Ankur,

There has been a period of restlessness, with no information coming forth from a couple of advocates I got in touch with, nor from the CA’s I spoke to, It seems this (personal Bankruptcy) as compared to Company Bankruptcy is an unheard of phenomenon in INDIA. If you could please please provide me with some information as to the ACT under which it is possible I may be able to look up on the same and then find a way through the muddle that I’m in, alternatively you can mail me your contact details so that I can get in touch with you.

I’d be obliged if you can help me through as you are the only ray of hope that is visible..

Thanks

Rajeev

Hi Ankur,

There has been a period of restlessness, with no information coming forth from a couple of advocates I got in touch with, nor from the CA’s I spoke to, It seems this (personal Bankruptcy) as compared to Company Bankruptcy is an unheard of phenomenon in INDIA. If you could please please provide me with some information as to the ACT under which it is possible I may be able to look up on the same and then find a way through the muddle that I’m in, alternatively you can mail me your contact details so that I can get in touch with you.

I’d be obliged if you can help me through as you are the only ray of hope that is visible..

Thanks

Rajeev

Hi Ankur Aggarwal:

Can you please suggest how I file for Bankruptcy and how much it would cost me?

Thank you.

Regards.

Veena

My father’s business which was in partnership was closed due to financial problems in 1989.The other 2 partners are absconding. The firm was then sold by the MSFC in 1994 and the amount which was to be paid was Rs. 3 Lakhs.
The case was prolonged for 20 years and now they demand Rs. 74 lakhs.My father is 73 yrs old and has no means of income at all.
What is your advice in this case? Of course it is impossible to pay off such a huge debt.Is bankrupty probable in this case?

Hi,
Just a query. What if someone end up with large debt servicing credit card companies who charge up to 48% interest. I have a relative who have taken money from credit card to pay back other credit card company. Before he could understand the consequence he had ran large debt. He also have borrowed money from friends and relatives to pay back these companies. Can he declare bankruptcy ?

Hi Ankur Aggarwal:

Can you please suggest how I file for Bankruptcy and how much it would cost me?

Thank you.

Regards.

ALWIN

Hi,

The article is good enough to read. My concern about this article is about the phrase i.e.

India has bankruptcy laws dating as old as 1874… and today’s law clearly demarcates the business/company’s assets from the personal assets… it distinguishes between the assets of the family and your assets and has all the features that allows you to write-off the loan once and for all and start again. Once you start the bankruptcy proceedings, the bank will audit you, you might be asked to visit the court/negotiation table a couple of times… but can no longer harass for the dues…

My question is that if I file for a bankruptcy, would my family assets will effects or just my owned assets will seize.

My situation is worst and I am about to file for a bankruptcy and don’t have any of my own asset. In this condition would my parents assets will effect or not?

I am in this condition because of my foolishness not my parent’s.

Kindly Suggest me the way out ASAP.

Thanks & Regards

My sister and her husband have no job and they have acrrued several lakhs of rupees in debt using personal loan and credit cards. They have no assets. How can they file for bankruptcy and what is the first step.

I got a lone from Bank tune of Rs 9 Lac i.e 5 lac in shape of Cash credit limit ( CC Limit) and 4 lac as fixed loan for start up a species unit but unit got failed and for recovery bank filed a case in the Session court. The decided in favour of bank for recovery of Rs 20 Lacs . Now the bank filed for permission to take over the posseion of my house which is laying as gurantee with the bank please guide me but can i do now as I have no even a single painy to repay the loan .

I have got the answer of this question… My question is that if I file for a bankruptcy, would my family assets will effects or just my owned assets will seize. But my question is that is it costly to file for bankruptcy in maharashtra and if it is declaired that i am bankrupt then what is the next step for me can i run the same business which i am running now please suggest me the right answer.

My problem is I have accrued loans of rs15 lakhs due to my foolishness of having faith on my relations whom I helped during my good bussiness period ihave no assets but being harassed by allcreditors please guide me

One of my friend took loan from govt, pvt and cooperative banks. He does not have any assets whatsoever. Can he file bankruptcy ? i.e. Can an individual file bankruptcy ? or it is only for a company or firm ? Whether in the meantime the recovery agents can harass him. Please reply at the earliest.

i’ve availed a personal loan of 10 lacs each from 2 banks.I was salaried till feb 09 at a snr level after which i lost my job. After that i tried my luck in shares business in which i lost my money. Now I am unable to pay my PL dues as well as some credit card debt. I am venturing into new business but unable to concentrate on the same due to frequent calls from recovery agents. Can I file for bankruptcy and start new ventures in my name itself. what will be the implications. i need urgent counselling..pl help.

sir ,
i m having grt loss in my bussiness and i m not able to pay back the amount to other parties shall i go for the bankrupt as i cant get back my money from the my dealrs as they diidnt pay me back and i also have a personal loan of rs. 4 lac from bank and i m not able to pay it back . sir i ont hav any property and any four wheeler .waht can i do. just advice and how can i go for bancrupcy and wat are the precautions for this

Hi,

Can you tell me what is the procedure for filing for individual or couple bankruptcy in India? How does one go about it?

live your life as you are hide rightnow. never use your golden days identity like pancard, driving licence, emailid, mobile nos, even change your kids school. and start new life this only way.

please anyone let me know the procedure for filing bankruptcy in india and also the implications of it?????
my husband has been running a business for 4 years with the money borrowed from his friends at very high interest and in the intial days since the business was running properly was able to expand and easily pay interest and in the process of expansion was able to raise further funds from others. now the business has started dipping in the last 6 months. due to the goodwill raising funds was not an issue then. now as far as my assessment goes we are deeply in trouble with over 10crores lost and will not be able to return that sought of money and hence we have run away from home and hiding for the fear of people killing us. i have a daughter of 2 years to take care. my husband is working in a supermarket for our livelihood. dont know what to do??? can anyone suggest something????????please

Having read this I thought it was rather informative. I appreciate you taking the time and effort to
put this informative article together. I once again find myself spending way too much time both reading
and posting comments. But so what, it was still worth it!

This is the perfect webpage for everyone who wishes to understand this topic.

You realize a whole lot its almost hard to argue with you
(not that I actually will need to…HaHa).

You certainly put a brand new spin on a topic which has been discussed for years.
Wonderful stuff, just great!

In USA if you file a bankruptcy you are not eligible to get loan from any financial institutions. Is it the same case in India too?

Filing bankruptcy is pretty easy.

Higher a lawyer or buy a stamp paper worth 500/ and mention your name address and subject as bankruptcy petition in respective court under section Presidency act 1920. Mention all your liabilities on and assets on one page. Please remember to highlight more liability than assets. Court will appoint an office…bribe him if he shows tantrum/negative vibes. You are all set as free bird in the sky for few months/year.

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