Filing bankruptcy? Understand the Bankruptcy Procedure

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 unable to pay in order to get the petition into effect.

The court now comes in picture and will determine whether to declare a bankruptcy 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 will call for a meeting with both the debtor and the creditor. The personal property of the debtor’s would be treated under the trustee of the bankruptcy 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.

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 a special officer appointed by the court. Also known commonly as the bankruptcy administrator, he has responsibilities of supervising the filed cases and activities between the creditors and the debtor.

All debtors who files for bankruptcy must go for credit counselling course. Do ensure that you attend the course from the court appointed one. They will tell you about the repayment plans and other procedures that involves in the bankruptcy. Knowing a little more about bankruptcy is important.