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

For debts that is big, a combined petition can be raised. In filing the petition, the creditor must provide the proof that the debtor is not able to make repayments in order to get the petition into force.

After the raising of the petition, the court will decide if the it is OK to declare bankruptcy. Once the order of bankruptcy is passed, 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. With the order, 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. Then the valuable items can be sold.

The official in charge of the debtor’s properties will have to sell the properties, 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, 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. You may want to ask: Who is this Trustee? The Trustee is is a court assigned officer with certain authority. 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.

All debtors who files for bankruptcy must go for credit counselling course. Do ensure that you attend the course from the court appointed one. The course will educate you in the details of bankruptcy. Knowing a little more about bankruptcy is important.

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