Maintaining Rights to Property When a Debtor Claims Bankruptcy

Debt collection isn’t easy. The situation gets even more difficult for a creditor when a debtor claims bankruptcy. Maintaining a creditor’s right to property can be difficult; however, most creditors will still have a few different options depending on the type of bankruptcy that a debtor files. The court might also analyze what initiated the debtor’s claim and how things continue throughout the bankruptcy process.

When facing a debtor that has claimed bankruptcy, many creditors stop pursuing the debt collection altogether, severing the relationship with the debtor entirely. Unfortunately, this is premature in many instances where a creditor can claim their rights to debtor property during liquidation and when reworking a payment plan or stopping a discharge remains a viable debt collection tactic.

Courts disperse assets in bankruptcy cases based on the priority of a claim. For this reason, it is crucial to enlist creditor bankruptcy representation in Key West to ensure a positive outcome in a debtor bankruptcy situation.

Creditors may also depend on the bankruptcy court to express any concerns related to a debtor’s bankruptcy plan, the course of asset liquidation, in addition to payment arrangements and estate assets. Furthermore, creditors may press the court regarding a debtor’s rights to discharge specific types of debt in bankruptcy as well.

Debtor bankruptcy is a convoluted area of the law depending on an expert attorney like those that we can provide at the Law Offices of Paul A. Humbert, P.L. We can guide you through the procedure while representing your best interests and rights in these matters.

Debt Collection during Debtor Bankruptcy

When a debtor decides to file for bankruptcy, the court will initiate something called an automatic stay. This action prevents debt collectors from engaging in collections activities throughout the bankruptcy proceeding. Creditors must cease the following actions:

• Billing
• Correspondence (Demand Letters)
• Telephone Calls
• Wage Garnishment
• Any Additional Debt Collection Activities Taking Action to Reclaim a Debt

The good news is that a creditor rights attorney can file a claim with the court to a portion of the debtor’s bankruptcy assets. 

As soon as the bankruptcy filing takes place, the court will then send out a notice to the debtor’s creditors with information about the filing. This documentation will include information on the bankruptcy deadlines and how they can file a proof of claim to the debtor’s assets.

Creditors must act swiftly as the court strictly imposes these deadlines. If they submit something late or miss an important filing notice, they will essentially remain out of luck to reclaim even a portion of what a debtor owes them.

Creditor bankruptcy representation in Key West remains the ideal solution to assist clients with managing a debtor bankruptcy case. They represent a creditor’s best interests in negotiations and litigation should this become necessary throughout the bankruptcy.

An attorney will actively monitor a bankruptcy situation, ensuring that the creditor remains ready and aware of all developments. This includes opportunities to file actions against discharging specific types of debt that would otherwise prevent a creditor from reclaiming their rightful property.

Creditor Bankruptcy Representation in Key West | The Law Offices of Paul A. Humbert, P.L.

Several changes can occur throughout a debtor’s bankruptcy case. Debtors may make a filing in “bad faith”. The courts may consider a bankruptcy filing in bad faith if:

• A bankruptcy debtor files more than one case within a year preceding the bankruptcy case.
• The debtor cannot provide or demonstrate economic reasoning for the bankruptcy filing.
• A debtor refuses to cooperate with the court.
• The bankruptcy debtor cannot fail to meet deadlines or payments to the court.

Nonviable or bad faith cases can change quickly, and creditors must be ready. Attorneys from our firm at the Law Offices of Paul A. Humbert, P.L. have the experience working in these cases to help creditors attain the best possible outcome.

We work hard for our clients to provide a comprehensive understanding of their options to handle debtor bankruptcy. Our firm works with various business and creditor entities from local companies to large banks and credit unions. This offers us a unique insight to guide clients through the wide variety of circumstances that can take place throughout a debtor bankruptcy case.

Contact the Law Office of Paul A. Humbert, P.L. today to learn more about creditor bankruptcy representation in Key West, throughout South Florida, and anywhere in the United States.