Bankruptcy is an option usually considered when a person or a business entity cannot afford to pay their debts. Although many people refuse to agree or acknowledge bankruptcy orders because of the bad stigma it brings, it can still be made without the consent of the business or individual involved.
The best way to handle a bankruptcy order is to fully cooperate. You may refuse to agree with the creditors’ claims and instead try to reach a settlement before the petition is heard. Once the petition is heard and the bankruptcy proceedings begin, it will already be very difficult and expensive to reach a settlement.
A bankruptcy proceeding is a procedure where a certain person in debt or a certain business is declared bankrupt. The first step in a bankruptcy proceeding is the filing of a petition containing a schedule of debts, assets and income potential. After the petition has been filed, a hearing is then scheduled. This hearing is usually brief and involves the judge assigning a professional trustee to assess the situation.
Following the assessment process, the professional trustee shall make a report on the current financial condition of the business or individual. The trustee shall specifically report on what debts are dischargeable, what assets are not liable and what payments can be made. If there are assets available, the creditors shall then be requested to write a creditor’s claim.
Although a bankruptcy proceeding may differ on a case to case basis, the next and final step is usually the discharging of the bankrupt.