Bankruptcy – How Your Debts Are Paid

Sometimes, people are forced into bankruptcy by their creditors and they have no other option but to pay back what they owe to them. You can either sell your assets to pay back to your creditors or you can sell your home, or use your savings to pay back the debt. Following is detailed information about how you can repay your debts during a bankruptcy and who will be responsible for your assets.

Confirming your Assets

When you are declared bankrupt by your creditors, a trustee will be appointed to you who will take over all of your assets and spare income. The trustee will also manage your bankruptcy as well, including tasks such as selling your assets and making payments to your creditors. During the first two weeks of you being declared bankrupt, an official officer from the bankruptcy court will come to interview you and ask you to provide information about your assets, savings, income, and debts. This information will help the official receiver to determine the following things.

• Confirm the debts that can or cannot be included in your bankruptcy

• Figure out the total worth of your debts

• And work out how much money you have in the form of assets. 

Selling Your Assets To Pay Back Your Debt

It is the responsibility of your trustee to organize a sale out of all the assets you own. The amount gained by the sale of your assets will be distributed among your creditors, if the amount if less than the amount you owe, then the creditors will be paid back in percentages. If the money from the sale of your assets was enough to repay all of your debts, then the court will cancel your bankruptcy. However, if the sale of your assets resulted in more money than needed to repay your debts, then this balance will be paid back to you. 

In some cases, if you are not able to repay the debts in full, you will just have to pass the bankruptcy duration to get out of bankruptcy. That is, when the amount from the sale of your assets was not enough to repay your debts. However, you can also be granted regular payments to repay your debts if you have some savings from your income every month.  

Declaring bankruptcy is not always an option because sometimes, your creditors can force bankruptcy upon you as well. Therefore, it is important to know how you will repay your debts when that happens.