When a debtor files for bankruptcy protection, they are indicating that they can no longer pay their creditors. To start the bankruptcy process, a creditor will send a Notice of Bankruptcy to the debtor. This is the first step toward filing for bankruptcy protection. At the first meeting with the trustee, the debtor and their attorneys will discuss how to divide up the debt amongst the two. Click here to get a free consultation with a great bankruptcy lawyer.
Once the official bankruptcy forms have been filed, it is important to remember that a discharge in bankruptcy does not absolve the debtor of their debts. Discharge only gives the power of payment to the discharged individual. Creditors are still responsible for collecting the outstanding debts, as well as the late fees and penalties. When a discharge is filed, most creditors will cease collection activities and refer the matter to the Office of the Superintendent of Bankruptcy. When this occurs, collection activities cease as well.
The next step involves the petition. This is where the information provided by the debtor and their attorneys is used to gather the necessary information to file the petition. The petition must be filed in the appropriate court where the bankruptcy has been filed. Most counties will have a special county office for this purpose. The clerk who receives the petition must then enter the petition information on the appropriate forms and then send it to the court.
After receiving the petition, the judge will then give the petitioner a chance to respond to the complaint. If the petitioner objects to some aspect of the bankruptcy, they must do so in writing. However, if the complaint relates to minor mistakes, the judge may choose to ignore the objection and allow the proceeding to continue. On the other hand, if the petitioner agrees to a settlement, the case will move forward.
Once all of the paperwork has been filed with the court, an official hearing on the bankruptcy petition will take place. At this time, a trustee will attend the hearing and explain the entire proceedings of the case. Generally, the judge will then make his decision and either approve or deny the petition. If the debtor and their attorneys are agreeable to the terms of the agreement reached, a temporary name will be given to the debtor and they can begin rebuilding their lives.
If an involuntary bankruptcy petition filing has been done, the results can and will be different than expected. Depending on the type of bankruptcy involved, the outcomes can vary greatly. Creditors are generally opposed to voluntarily petition filing as they feel that the original debts should be paid in full. However, if a lender is convinced that the debtor has suffered substantial damage and the only option left open is bankruptcy, he may end up allowing the debtor to file for protection from the creditors.