The bankruptcy procedure often begins with a debtor filing a bankruptcy petition.

A group of creditors can give a joint petition if the debt owed is huge. The creditor must prove that the debtor has been unable to pay the debts taken and has failed to honor the treaty signed between the creditor and the debtor.

The judge or the court will decide if the petition is to be proceeded or not. If the order for bankruptcy is given, a court official, usually known as the trustee, will be assigned to the case.

Within the next 21 days, the debtor has to submit a bankruptcy order to the appointed court official. 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. All the property of the debtor will be under the trustee and the debtor will be given only the required essentials to assist in their trade and living. 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.

There is a special case for secured debts as secured debts are not tied to the trustee for the debts. 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. So who is this official appointed by the court? He is the Trustee. The Trustee is just an officer appointed by the court. This officer 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.

Tags: bankruptcy procedure

This entry was posted on Wednesday, May 13th, 2009 at 6:48 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.