Insolvency can occur in both personal and business levels. It happens when a person or company is in a serious economic distress that it fails to pay its obligations to creditors. When this is completely unmanaged, it can lead to bankruptcy.
Personal and Business Insolvency
Individuals that are currently under this condition can consider filing personal insolvency trhough Perth law firms. For businesses, filing a cash flow insolvency or a balance sheet insolvency may be considered. The former applies to businesses that don’t have enough cash to cover debts in a timely manner. The latter may serve well for businesses with negative net assets.
A business can be cash insolvent but balance sheet solvent and vice versa. The more a person or business is aware of such financial conditions, the more they can look for better ways to manage debts and prevent bankruptcy.
This shows that insolvency can be temporary and correctable but not bankruptcy. Once a person or business is declared bankrupt it cannot be rectified.
How Insolvency Firms can help
Filing for insolvency may come with a court proceeding. A debtor’s petition will be accepted or denied depending on the merits of claims presented. To make sure that the court will acknowledge the petition, the required legal process must be followed including providing necessary information and proof of insolvency.
Firms can help debtors apply for a petition, ensure that the process is properly followed and the required documents are presented well. How? By interpreting the law for their clients, representing them during negotiations and providing legal advice.
A legal matter like filing for an insolvency order requires the right guidance from experts in this field. While the Australian government provides downloadable information on insolvency, it helps that debtors are guided every step of the way.
An error in information and proof submitted may result in a lifting of the insolvency order. That only puts a debtor in a worse situation. Debtors can’t let that happen that’s why they seek help for legal guidance and representation.