Bankrupt? Now what? Steps to Follow when Declared Bankrupt

In a world where credit has become a lot more accessible, the reality of keeping up with repayments and honouring credit agreements has often become an after-thought for many people. When this happens and they have to resort to filing for bankruptcy, this is generally when true reality hits. It should be opted for as an absolute last resort, because it’s quite expensive and tarnishes records.

Bankruptcy is a legal procedure that enables individuals or business entities to get out of debt. There are different types, while not everyone qualifies. Individuals can file or creditors can apply in order to recoup costs.

Alex has just been declared bankrupt and she is now wondering what steps she needs to take next.

As an individual, what steps should be taken following a declaration of bankruptcy?

Send official letters to all the entities you owe, in order to notify them of your intent to prevent further legal actions. The High Court won’t approve unless all parties will benefit, so creditors will be assured that they will receive the payments due to them and they won’t have to contact you for payments.

An appraiser values the assets Alex has and she will be informed of how much they are worth, so they may be sold in order to facilitate settlement of debts.

Once the court grants the order for sequestration, a trustee will be appointed to handle sale of assets.

An advocate will represent you once you have been declared bankrupt. Unless instructed to do so, you will not have to appear in court.

Alex’s duty will be to ensure that her debts ae paid off using the sold assets.

Once creditors have received benefits and she has paid the remainder off, she’ll be able to apply for a rehabilitation order. Even though her bankruptcy will remain on her credit record for a decade, a rehabilitation order means that she is no longer bankrupt.

You might be able to enter into a credit agreement while insolvent, as long as you disclose that you have been declared bankrupt.

The benefit of filing for bankruptcy is that you become completely debt-free in a relatively short period of time.