The bankruptcy procedure usually begins with a bankruptcy petition that is raised by the debtor or creditor.
For debts that is huge, a combined petition may be raised. The creditor must prove that the debtor has been unable to pay the debts taken and did not honor the agreement signed by the creditor and the debtor.
After the raising of the petition, the court will decide if the it is OK to declare bankruptcy. Once the order of bankruptcy is passed, a court official, usually known as the trustee, will be assigned to the case.
The debtor has to submit the Official Receiver within 21 days of the making of a bankruptcy order the statement of affairs. Based on that, 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, so that the money can be used to be paid to the creditors or clearing the bankrupt’s debts.
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, then the creditor has the option to claim the balance amount as an unsecured creditor. 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 a special 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. 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.
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