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Bankruptcy is all about the overall liquidation of a person’s property with the proceedings being used to pay back debts. Under this, virtually all tangible assets are seized for sale at auction. With the amount collected, the maximum possible amount is repaid to the creditors against the credit given by them.
The usual cause of Bankruptcy is excessive credit card debt and personal loans. Bankruptcy law deals with people seeking assistance and help to remove the stigma attached to bankruptcy. Bankruptcy law can also require a person to pay back some of their debts under a Bankruptcy Restriction Order, or BRO, based on their available income. A BRO can be issued by the Official Receiver for up to 15 years, depending on the circumstances leading to the bankruptcy.
The first and foremost purpose of bankruptcy law is to provide assistance to honest debtors who really want to pay back their debts to creditors and begin a new life. Secondly, they want to pay back the creditors as disposable income allows and from the equity released from property seized in bankruptcy.
There are certain things that are specially exempted from seizure and can be retained by the debtor. These exempted assets are equity of solvent spouse, tools of the person’s trade and certain personal effects.
In the case of bankruptcy, it is imperative to hire the services of a solicitor or insolvency practitioner. This specialised service provider can help you ascertain your status in an accurate manner so that you are in a better position to understand your situation and how bankruptcy will affect you.
Under bankruptcy law, an insolvent person has to attend meetings with an Official Receiver. He/she will be appointed by the court and will handle the seizure and sale of assets, distribution of funds to creditors, and make appropriate judgements regarding the bankrupt and their situation.
Creditors are given a pro-rata payment from the liquidation of tangible assets, however if a Bankruptcy Restriction Order is imposed, they may continue to receive additional payments during the length of the BRO.