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WHAT IS AN “ORDINARY BANKRUPTCY”

September 5, 2017

There are two types of bankruptcy “ordinary” and “summary” – ironically the summary form of bankruptcy is the most common.

Back in ‘the day’ before consumers were getting into debt and requiring access to bankruptcy services there were no “summary” bankruptcy proceedings, all bankruptcies were “ordinary”.  The differences between the two types are generally process and not effect.  The result of either an ordinary or a summary proceeding is (in most cases) a discharge, or release, from debt obligations.

A summary proceeding is one in which the consumer has few assets that are available for creditors whereas an ordinary proceeding is either for companies or consumers who have a significant amount of assets that are to be liquidated for the creditors.

In a summary proceeding the debtor’s name is not published in the newspaper and they rarely need to attend at any creditor meetings or at any court hearings.  However, in an ordinary proceeding the bankrupt’s name must be published in a local newspaper and a meeting of creditors must be held.   In a summary proceeding the trustee’s fees are set by tariff but in an ordinary bankruptcy the trustee and its staff must record and bill all work on a time billing basis.   All of which makes an ordinary bankruptcy more expensive and cumbersome to administer than a summary proceeding.