A look at Bankruptcy Procedure
The bankruptcy procedure often begins with a debtor filing a bankruptcy petition.
For debts that is huge, a combined petition can be raised. The creditor must prove that the debtor has been unable to pay the debts taken and has failed to honor the agreement done between the creditor and the debtor.
The court now comes in picture and will determine whether to declare a bankruptcy or not. 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. 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. All the property of the debtor will be under the trustee and only a few properties will be exempted from the bankruptcy. Possessions that are not exempted will be sold for cash.
The official in charge of the debtor’s properties will have to sell the properties, so that the money can be used to be paid to the creditors or clearing the bankrupt’s debts.
A secured creditor does not depend on the trustee for the repayment of the debts that are due to them. After the sale of the debtor’s property if that amount is not enough to clear the secure loan, 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. You may want to ask: Who is this Trustee? 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.
Make sure to take counseling from an approved agency before filing for bankruptcy. They will tell you about the repayment plans and other procedures that involves in the bankruptcy. One should be updated with the bankruptcy laws and the fees that is present for each chapter of the bankruptcy.