Existing Creditor Rights in Bankruptcy Situations
Creditors frequently assume they lose their rights or other legal alternatives with respect to claims against debtors after receiving a bankruptcy notice. This simply isn’t true. Creditors remain entitled to:
- Shared distribution from a bankruptcy estate based on claim priority. This includes most unsecured debts, non-wage claims. However, these remain low in priority, often paying little to no benefits.
- A hearing concerning court matters related to a bankruptcy debtor’s plans. This takes place in bankruptcy chapters 11, 12, and 13. Creditors may also receive information on the debtor’s non-exempt asset liquidation, in addition to payments from assets in the estate.
- The right to challenge individual debtor rights to discharges and discharges to the creditor’s specific debt.
Nonetheless, in bankruptcy situations, creditors still must cease any collection actions. This includes making collections calls, billing, and lawsuits that remain in pending status against a debtor.
An automatic stay goes into effect in most bankruptcy scenarios, protecting the debtor and their property from any collections activities during the bankruptcy. In bankruptcy chapter 13, the automatic stay also protects any codebtors to consumer debts.
When hearing about a client bankruptcy, a creditor must file a claim with the court. The notice of the bankruptcy will inform the creditor on where they can file a proof of claim, as well as any applicable deadlines. Creditors must act quickly in these instances, often necessitating creditor bankruptcy representation in Coconut Grove for the best possible outcome.
Protecting Creditor Rights in Bankruptcy Situations
All across the United States, courts continue seeing increases in debt collection cases. Many involve credit card debts, foreclosures, and eviction situations. The way that debt collection agencies and debt collection lawyers practice has also significantly transformed over time as well.
A large portion of the reason that so many debtors now consider bankruptcy as a viable option to handle their debt is the aforementioned automatic stay. After filing, creditors must cease collections activities entirely. They may only act through the bankruptcy court.
When this occurs, creditor bankruptcy representation in Coconut Grove remains imperative for a positive outcome in a bankruptcy case. However, a qualified bankruptcy attorney should possess familiarity with these situations to determine if a debtor remains eligible for bankruptcy relief.
Various exceptions exist depending on the specific type of bankruptcy the debtor selects. An attorney can analyze the case to determine if a creditor may object to the bankruptcy entirely, exceptions regarding discharges, and if lifting the automatic stay is a viable approach.
In most legal situations, Chapter 13 bankruptcy is far more favorable to creditors. For this reason, several debtors will seek filing for Chapter 7 bankruptcy. Nonetheless, a successful filing for Chapter 7 does not mean all is lost. Some cases initially filed as Chapter 7 may convert to Chapter 13, or could experience dismissal entirely.
Chapter 7 Bankruptcy Alternatives and Procedures
When debtors cannot file for Chapter 7 bankruptcy, they will typically face Chapter 13 of the bankruptcy code. In a Chapter 13 bankruptcy, the debtor will seek to reduce their debt, or potentially negotiate for a debt adjustment.
Chapter 13 involves the debtor turning over the disposable income to the bankruptcy trustee before dispersing to creditors. They must additionally seek a bankruptcy court’s permission to pursue significant activities outside their ordinary course of business. For this reason, we can easily see why debtors prefer Chapter 7 to Chapter 13 bankruptcy.
Once a bankruptcy is filed as Chapter 13, debtors can then present a plan for repayment. This offers full, partial, or no plan regarding repayment of unsecured claims. However, a notable amount of Chapter 13 repayment plans still go unpaid. For this reason, creditor bankruptcy representation in Coconut Grove from a qualified attorney is essential to reclaiming potentially lost debts.
This legal professional can save a client thousands of dollars that they could not access through alternative outcomes. This ultimately increases the chances for successful debt collection a judgment or other debt incorporated within a debtor’s bankruptcy filing.
Creditor Bankruptcy Representation in Coconut Grove from the Law Offices of Paul A. Humbert, P.L.
In today’s legal world, as well as the economy, creditors must race the clock to reclaim their rightful property. As time passes, certain economic and other factors can stain debtors to their limit, ultimately resulting in a bankruptcy situation. Not to worry, our firm can help.
To learn more about creditor bankruptcy representation in Coconut Grove from the Law Offices of Paul A. Humbert, P.L., contact our dedicated firm today!
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