Rights of Creditors During Bankruptcy

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Rights of Creditors During Bankruptcy

Call: 888-297-6203

All too frequently, creditors in bankruptcy quit after receiving a notice of filing. They believe they have no legal recourse or other options for pursuing their claim against the debtor. No, not at all.

  • According to the priority of their claim, creditors in bankruptcy are eligible to: Participate in any distribution from the bankruptcy estate. In the priority system, the majority of unsecured, non-wage claims are low on the list and may get little to nothing.
  • Having your case reviewed by the court in regards to the debtor’s plan (in chapters 11, 12, and 13), the sale of the debtor’s non-exempt assets, and receiving payments from the estate’s assets.
  • Contest a debtor’s individual right to a discharge or the discharge of a specific debt owed to a creditor.

What steps should a creditor take next?

Stop all collection efforts, including any ongoing legal actions, phone calls, and billing against the debtor. The debtor and his assets are shielded from all means of collection during the bankruptcy by the automatic stay. Co-debtors on consumer loans are likewise protected by the stay in Chapter 13 cases.

Submit a lawsuit to the court: You can find out where to file a proof of claim and when to do so by reading the court clerk’s notice of the bankruptcy that was given to you. Act quickly since bankruptcy cases severely enforce deadlines.

If the evidence of claim form’s supporting papers are extensive, provide a statement of the claim along with any contracts or judgments that pertain to your claim. If the court does not send you a claim form, obtain one online. Think about whether your claim may be dismissed. In a Chapter 7 bankruptcy proceeding, certain types of claims are not dischargeable. Certain responsibilities resulting from a divorce, debts acquired by fraud or the debtor’s intentional and malicious actions, and damages from drunk driving are a few examples of claims that cannot be discharged.

If you are around Los Angeles or Texas, you can consult a renowned firm named Recovery Law Group who can help you with all your issues related to Bankrupcy, You can get in touch with them using this phone number – (888-297-6203) or the link: https://www.recoverylawgroup.com/bankruptcy/

If your claim arguably fits into one of those categories, speak with a lawyer right now. The time frames in bankruptcy are quite limited, therefore you must launch an adversary procedure in the bankruptcy case to maintain your claim after bankruptcy.

11 U.S.C. 523 has a comprehensive list of the obligations that cannot be discharged in a Chapter 7 bankruptcy. See our family law page for details on specific factors influencing debts arising from family law.

Check to see if the debtor’s assets are used to secure your claim: Secured creditors are granted special rights to the assets used as security for their claims through a lien. Most frequently, a deed of trust on real property, a security agreement on personal property, or a judgement creates and specifies such rights.

In order to prevent a reduction in the equity available to secure their claim, secured creditors have the best chance of receiving “sufficient protection payments” or relief from the automatic stay. Learn more about stay relief.

Provide the trustee with information: Contact the trustee and offer any papers or data that can help the trustee recover money for the estate or contest the debtor’s claim to a discharge if you believe that the debtor’s schedules aren’t telling the entire picture or that assets are hidden or have been moved.

The greatest way to prevent exploitation of the bankruptcy system is for creditors to be vigilant. Under Rule 2004 of the Federal Rules of Bankruptcy Procedure, creditors have the right to ask the debtor under oath on their assets, debts, and financial history during the initial meeting of creditors or during subsequently scheduled exams.

Follow the case’s development: Some bankruptcy cases are rejected because the debtor did not follow the Code’s guidelines. When that occurs, creditors have the right, under state law, to seek collection. Sometimes situations that were once categorised as “no asset” situations turn into asset situations from which a dividend may be paid.

Until the matter is resolved, make sure the court has your current address so you may be notified if there will be a payout.


    2022-09-13T05:10:38+00:00