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 usually begins with a debtor filing a bankruptcy petition.

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.

The debtor has to submit the Official Receiver within 21 days of the making of a bankruptcy order the statement of affairs. Once the order is received, the Official Receiver will take a decision on calling a meeting of creditors to share them about the statements of the debtors. All the property of the debtor will be under the trustee and only a few properties will be exempted from the bankruptcy. Then the valuable items can be sold.

The trustee in bankruptcy has the responsibility to convert the debtor’s properties into money, the sold amount will then be used to clear the debts of the debtor.

There is a special case for secured debts as secured debts are not tied to the trustee for the debts. If the sale is unable to produce sufficient funds for covering the debt, these secured loan will be first in line when it comes to claiming via unsecured loan. On the other hand, if the sale of the debtor’s property is more than the debts owe combined then the repayment will be distributed equally. The Trustee is is a court assigned officer with certain authority. The Trustee is also known as the bankruptcy administrator as he holds power to process the entire case of bankruptcy and repayment.

Make sure to take counseling from an approved agency before filing for bankruptcy. The course will educate you in the details of bankruptcy. All of us should be well-versed in the laws of bankruptcy and the fees involved so that it can help when the need arises.