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Bankruptcy: proof of debts


A creditor wishing to share in the proceeds of a bankrupt estate must prove his debt. He does this by submitting to the official receiver or trustee an affidavit giving a statement of account. This statement must be detailed and give means of verification. If the creditor has any security he must say so; if he docs not he may be deemed to have surrendered it. Trade discounts are deducted and also agreed cash discounts but not exceeding 5 per cent. (Special rules apply to moneylenders.) The cost of the proof must be borne by the creditor. Double proof is not allowed, i.e. two creditors cannot prove for the same debt (both guarantor and creditor cannot prove. for instance). However, one creditor could prove in two bankruptcies. Proofs must be stamped and be dealt with within a specified period. Proofs may be admitted, rejected or held over for consideration. It is not necessary for each employee to prove separately for wages.

Reference: The Penguin Business Dictionary, 3rd edt.