This is financial adviser Patrick Munro talking
about what happens in bankruptcy. In today’s economy, it’s an unfortunate fact, but many
people get to a point where they can no longer take care of their financial affairs. They
have too many credit cards. They have too many obligations upon them. And they have
no other choice but to take the legal route of bankruptcy. Now, there’s different types
of bankruptcy. There’s chapter 7. There’s chapter 11 and chapter 13. For more information,
get a hold of your legal adviser. But essentially, during a bankruptcy, your assets are seized
by a receiver. And the receiver then takes a list of the asset creditors that you have
business with, and they value the assets that you do have remaining. They also will sell
off those assets, normally for pennies on the dollar. And then based on pecking order
of creditors, they will receive their pro rata amount of business that they had with
you, on a pennies per dollar basis in the settlement. Of course, the receiver charges
a fee for that. Normally the receiver is an attorney tied to the bankruptcy court. Make
sure that you use bankruptcy as a last resort. This is Patrick Munro, financial adviser,
talking about what happens in a bankruptcy.