Filing for bankruptcy in India means that one is not able to repay his debts and loans. It would be advisable to file for bankruptcy to avoid being hounded by your creditors if you are in serious financial trouble. However, filing for bankruptcy in India will not reflect well on your credit rating for a long time, making it hard for you to advance or borrow money in future. Filing for bankruptcy in India also results in social stigma.
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The Steps to Take
Put your financial records in order. Compile a record of your bills. Also compile a list of your assets and incomes. This income and expenditure financial record will enable you to know exactly how much you owe in debt. Indian law requires that you disclose all your assets whether you think they have value or not. This financial record will be used in an Indian court during the bankruptcy case.
Get a lawyer. The lawyer will initiate the bankruptcy proceedings. Any civil lawyer should be able to help you through the process as long as the lawyer is experienced in handling bankruptcy cases. The lawyer will help you to determine how much the whole process will cost you. The lawyer will also advise you on how to file your bankruptcy case according to your situation. It is a legal requirement that you consult a lawyer who will advise you on whether to proceed with the bankruptcy filing or not. See Resource 3 for a listing of Indian lawyers specializing in bankruptcy.
File for bankruptcy individually or jointly. In India, single people can file for bankruptcy alone. Married people should determine whether they need to file bankruptcy alone or if they should include their spouses. Not including your spouse means that your spouse will be liable to pay any debts you acquired while married.
File a petition under the Provincial Insolvency Act through your lawyer. Under the Act, you will be filing a suit to declare that you are bankrupt. You should not have any assets under your name. In case you are married, your spouse should not have any assets under her name. If you have children, the assets under their names should have been self-acquired. Provision of section 25 of Presidency Town Insolvency Act 1909 protects you from being arrested and detained due to the debts you owe.
Get a court ruling. The court will decide whether or not you are bankrupt. If you are declared bankrupt, get an interim order. This may take a number of months depending on the number of creditors you owe.