The manner in which insolvency proceedings are handled may depend on the jurisdiction in question. In most cases, however, beginning insolvency proceedings results in the cessation of debt collection efforts and gives you the opportunity to demonstrate your inability to pay your debts. In most cases, you will have to provide proof of your income and assets as part of the proceedings. Then, you will usually have to wait for a judge to approve or deny your petition. If approved, you may be granted a discharge of your included debts or allowed to restructure your debts so they are easier to pay.
While insolvency proceedings may vary from jurisdiction to jurisdiction, you can generally expect to have protection from your creditors throughout the process. Once you have petitioned the court in your jurisdiction for bankruptcy, you will typically have to provide notice of the proceedings to your creditors or provide the court with contact information so court officials can contact them with details about your case. Once your creditors have been notified, they will typically be prohibited from contacting you to discuss your debts or collect money from you. In some countries, creditors who attempt to collect debts during bankruptcy proceeding are breaking the law.
Another thing to expect from an insolvency proceeding is a requirement to disclose details about your finances. You will typically have to provide accurate information about your income. This may not only include money you earn from a job, but also unearned income. Likewise, if you own a business, even if it is not your primary source of income, you will likely have to share documents with the court that relate to the money you earn from the business, any amounts you are owed and money you are expected to pay to vendors and other business creditors.
Just as you must provide income information to the court during insolvency proceedings, you must also disclose details about your assets. You may have to provide a list of your assets to the court during the insolvency proceedings. The court may also request documents that not only prove that you own a particular asset, but also prove how much it is worth. In most places, failing to disclose assets, attempting to hide them, or lying about their worth during insolvency proceedings is considered a crime.
When you are involved in insolvency proceedings, you can also expect to have your request for relief approved or denied by the court. In some cases, for example, a court may approve your petition and discharge your debts. In others, however, it may approve your request to restructure your debts instead. In such a case, you may obtain payment arrangements that make it easier for you to repay the money you owe, but you probably won’t be released from paying your debts altogether.
