The bankruptcy procedure usually begins with a debtor filing a bankruptcy petition.
A group of creditors can give a joint petition if the debt owed is huge. In filing the petition, the creditor must provide the proof that the debtor is unable to pay in order to get the petition into effect.
After the raising of the petition, the court will decide if the it is OK to declare bankruptcy. If the bankruptcy is cleared to be declared, 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 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 the debtor will be given only the required essentials to assist in their trade and living. All the unexempted properties will be sold.
The trustee in bankruptcy has the responsibility to convert the debtor’s properties into money, proceeds from the sale will then be used to repay the debts owed.
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. 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 is a court assigned officer with certain authority. This officer called as the bankruptcy administrator having the 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.
Related Reading:
