Creditor Rights in Bankruptcy Situations

Creditors involved in bankruptcy situations often experience unique sets of issues. Their options often depend on the bankruptcy chapter that a debtor files, how their claim arose, as well as the proceedings during the bankruptcy case.

Many creditors receive a notice regarding debtor bankruptcy only to end the relationship right then and there assuming that they have no rights concerning the claim against the other party.

However, this simply isn’t true. Creditors involved in a debtor’s bankruptcy situation remain entitled to a share of the distribution from the bankruptcy estate. This is dispersed accordingly regarding the priority of their claim. 

They may also utilize the court as a forum to express concerns about a debtor’s plan, liquidation of non-exempt assets, as well as payments from these assets in the estate. A creditor can also challenge a debtor’s right to discharge their particular debt.

No matter the bankruptcy situation or the creditor’s claim, these cases often prove very difficult to litigate. The complex and convoluted nature is not something to attempt alone. Enlisting creditor bankruptcy representation in Miami-Dade is the best decision a creditor can make on the path towards a positive outcome.

What Creditors Should Know About Debtor Bankruptcy Cases

Creditors should cease any collection actions. This includes making telephone calls, billing, and lawsuits that might remain pending against a debtor. Bankruptcy initiates an automatic stay that protects the debtor, as well as their property from any forms of collection during a bankruptcy proceeding. 

However, creditors should enlist creditor bankruptcy representation in Miami-Dade to file a claim with the court. The court will disperse a notice of the bankruptcy to the creditor that will outline where they can file a proof of claim in addition to any applicable deadlines for doing so. 

It is essential to act quickly. The courts impose strictly enforced deadlines in debtor bankruptcy cases. If the creditor misses the date, they are out of luck concerning obtaining a recompense from the debtor’s bankruptcy.

Creditor bankruptcy representation in Miami-Dade can also determine if a creditor’s claim is dischargeable. Certain claims remain non-dischargeable if a debtor files Chapter 7 bankruptcy. This could reflect obligations that arise due to divorce, incurred debts due to fraud by the debtor, or damages as a result of drunk driving.

When a creditor’s claim arguably resides within one of these categories, consulting with creditor bankruptcy representation in Miami-Dade is crucial. They must file an adversary proceeding in the case to preserve their claim when the bankruptcy occurs in a very short amount of time.

A Creditor’s Claim Might Remain Secured by a Debtor’s Assets

Secured creditors possess a lien against a debtor’s property. This affords them very specific rights to the debtor’s property that acts as collateral for their claim. These rights are typically outlined and implemented by a deed of trust on tangible property, a judgment lien, or any security contract on personal property.

Secured creditors often possess the best possible chance to reclaim some compensation for their debt during an automatic stay. They may also seek protection payments that aim to prevent any declines in equity concerning their claim.

Creditor bankruptcy representation in Miami-Dade can determine if a secured claim is viable in a creditor’s case against a debtor’s bankruptcy filing. A legal professional will also monitor the situation and progress of the case.

Some courts will dismiss a debtor’s bankruptcy filing if they fail to comply with the imposed requirements. When this happens, creditors remain free to pursue collection activities within agreement with state law legally. 

Cases may also evolve from a non-asset case into asset-viable instances in which a creditor may seek a paid dividend. It is essential to secure creditor bankruptcy representation in Miami-Dade for this reason.

While creditors may wield numerous accounts and other activities during their typical day-to-day business dealings, an attorney dedicates their time and efforts to ensure proper progression with their clients’ best interest in mind.

This means they wield the requisite experience, tact, patience, and time to carefully analyze a case as it progresses while the creditor conducts their business as normal.

Creditor Bankruptcy Representation in Miami-Dade from The Law Offices of Paul A. Humbert, P.L.

The Law Offices of Paul A. Humbert, P.L. brings a comprehensive understanding of bankruptcy law to the table when representing our creditor clients. Relying on insights gained from representing various clients from small businesses to large corporations, we remain the ideal solution in a bankruptcy legal action.

To learn more about creditor bankruptcy representation in Miami-Dade from our firm, reach out to our firm today!

1.  “11 U.S. Code § 362 – Legal Information Institute – Cornell University.” https://www.law.cornell.edu/uscode/text/11/362. Accessed 22 Mar. 2021.