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bankruptcy proceedings definition
the bankruptcy procedure is a) filing a petition (voluntary or involuntary) to declare
a debtor person or business bankrupt, under Chapter 7, Chapter 11, or Chapter 13,
to allow reorganization or refinancing under a plan to meet the debts of the party
unable to meet his/her/its obligations. The petition is supposed to include a schedule
of debts, assets and income potential. b) A hearing called "first meeting of creditors"
with notice to all known creditors. This is often brief and usually results in the
judge assigning the matter to a professional trustee. c) Later the trustee reports
and there is a determination of what debts are dischargeable, what assets are exempt,
and what payments are possible. d) If there are assets available then the creditors
are requested in writing to file a "creditor's claim. " e) There may be other hearings,
reports, proposals, hearings on claims of fraudulent debts, petitions for removing
the stay on foreclosures and other matters. f) Debts secured by property or by judgment
lien are paid up to the amount of assets and funds available. g) The final step
is a hearing on discharge of the bankrupt, which wipes out unsecured debts (or a
pro rata share of them). Under Chapter 11 and 13 proceedings, the process will be
more drawn out and can go on for years as plans are proposed, possibilities of refinancing
are considered and, in effect, the debtor tries either to legitimately get out from
under his/her/its financial woes or delay while current profits are made and prayers
for economic salvation are made.
See also bankruptcy bankruptcy court claim in bankruptcy
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