Bankruptcy Procedure

In filing for bankruptcy, the debtor and the creditor should understand the procedure set out by the court. The procedure has been instituted so that both the debtor and the creditors can benefit from the proceedings.

A group of creditors can give a joint petition if the sum is higher. 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. If the order for bankruptcy is given, 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. 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. The personal property of the debtor’s would be treated under the trustee of the bankruptcy and the debtor will be given only the required essentials to assist in their trade and living. 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.

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 Law of bankruptcy is also called as liquidation that allows the debtor for paying the creditors through selling the assets and dividing the received amount equally among the creditors.

The Trustee is nothing but a special officer appointed by the court also called as the bankruptcy administrator having the 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.