Unsecured creditors can take no further action against a bankrupt to recover any debts incurred before being declared as a bankrupt. Unsecured creditors, have no power to deal with a bankrupt’s property and if any unsecured creditor intends to proceed with any legal action against a bankrupt, it may only be commenced with the leave of the court. Apart from filing a suit against a bankrupt, unsecured creditors should also file their Proof of Debt.
However, a secured creditor may deal with a bankrupt’s property under section 8(2) of the Insolvency Act 1967 and secured creditor has the right for interest if the property is realized within 12 months from the date of the Bankruptcy Order. Secured creditor may take legal action to realize the property of a bankrupt. The surplus after the sale will be given to the DGI to be credited back into the estate account of the bankrupt to be distributed to the creditors.
