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A look at Bankruptcy Procedure
By plrprousers | May 14, 2009
The bankruptcy procedure often starts with a bankruptcy petition that is raised by the debtor or creditor.
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 did not honor the treaty 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, an official will be appointed to take charge of 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 only a few properties will be exempted from the bankruptcy. Possessions that are not exempted will be sold for cash.
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, these secured loan will be first in line when it comes to claiming via unsecured loan. 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. So who is this official appointed by the court? He is the Trustee. The Trustee is a special officer appointed by the court. The Trustee is also known as the bankruptcy administrator as he holds 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. 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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