Introduction to Bankruptcy Procedure & Process

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Introduction to Bankruptcy Procedure & Process

Thursday, May 7th, 2009    Subscribe To Our Feed

The bankruptcy procedure often begins with a bankruptcy petition that is presented by the debtor or creditor.

A group of creditors can give a joint petition if the sum is higher. In filing the petition, the creditor must provide the proof that the debtor is not able to make repayments in order to get the petition into force.

The judge or the court will decide if the petition is to be proceeded or not. If the bankruptcy is cleared to be declared, then the court will have to appoint an Official Receiver who takes the role of controlling the debtor’s property.

Within the next 21 days, the debtor has to submit a bankruptcy order to the appointed court official. With the order, the Official Receiver will take a decision on calling a meeting of creditors to share them about the statements of the debtors. The trustee will take control of the debtor’s property and will decide which property will be sold to repay the loans and only a few properties will be exempted from the bankruptcy. All the unexempted properties will be sold.

The official in charge of the debtor’s properties will have to sell the properties, proceeds from the sale will then be used to repay the debts owed.

A secured creditor does not depend on the trustee for the repayment of the debts that are due to them. If the sale is unable to produce sufficient funds for covering the debt, then the creditor has the option to claim the balance amount as an unsecured creditor. But if the sale exceed than the sum owed then the creditors need to pay that excess to the trustee so that is can be distributed equally among the other creditors. The Trustee is just an officer appointed by the court. The Trustee is also known as the bankruptcy administrator as he holds power to process the entire case of bankruptcy and repayment.

All debtors who files for bankruptcy must go for credit counselling course. Do ensure that you attend the course from the court appointed one. The course will educate you in the details of bankruptcy. Knowing a little more about bankruptcy is important.