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A creditor is a person or organization to whom the debtor owes money, goods or services.

A creditor extends credit by giving a person or organization permission to borrow money with an arrangement or agreement to pay it back at a later date.

Banks and Financial institutions are perfect example of creditors.


The first thing you should do is to cease any collection action against the debtor. These include phone calls and execution of judgment that might be pending and thus not throwing good money after bad.

You should not demand payment from a bankrupt directly neither should you accept payments directly paid to you.

You must not accept any payment from any third party too. The creditor's act in accepting payment from the third party is an offense under Section 115(2) of the Bankruptcy Act 1967. Creditor has to remit such payment to the Official Assignee.

Immediately file a claim with the court. You should act promptly in filing Proof of Debt General Form and Proxy. Attach a copy of your agreement or contract, judgment concerning your claim and other supporting documents. You can only claim amount including interest and costs calculated up to the day the Debtor is adjudged a bankrupt.

You can determine whether your claim is secured by the debtor's assets. If you are a secured creditor, you will have a lien giving you specific rights to the property which is collateral for your claim. A secured creditor has the best chance of getting their share in the distribution of the bankruptcy estate.

Your vigilance as a creditor is the best way to prevent abuse of the bankruptcy system. You should contact the Official Assignee, if you suspect that the debtor's statement of affairs is not in accordance with fact. By providing such information and any supporting documents may help the Official Assignee recover money for the estate and also challenge the debtor's right to a discharge.

After the Official Assignee has served the Receiving and Adjudication Order on the bankrupt and the bankrupt has filed his statement of affairs, the Official Assignee will call a meeting of creditors, normally known as the first creditors meeting. During the meeting, you can question the debtor under the oath about assets, liabilities and financial history.

The Official Assignee will tell the creditors how much money will be shared out in the bankruptcy. You will be paid to the extent of the assets available and the priority of your claim. So make sure they have your current address until the case is closed.

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