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Understanding 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. In filing the petition, the creditor must hand in the proof that the debtor is unable to pay in order to get the petition into effect.
The judge or the court will decide if the petition is to be proceeded or not. If the order for bankruptcy is given, 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 will call for a meeting with both the debtor and the creditor. The trustee will take control of the debtor’s property and will decide which property will be sold to repay the loans and only a few properties will be exempted from the bankruptcy. All the unexempted properties will 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. 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 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. 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.
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