Maintaining and Defending Creditor Rights in Bankruptcy Cases

Despite what many debtors may think, creditors simply do not renounce their rights in the event of a bankruptcy situation. In fact, creditors maintain various options in bankruptcy litigation that can help preserve their rights and minimize their potential losses.

Bankruptcy proceedings in Florida help individuals or businesses eliminate or restructure their debts as overseen by a bankruptcy court. Typically, a creditor will receive a notice when someone who owes them money files for bankruptcy. Creditors may feel like they don’t hold any rights in the process. Luckily, with creditor bankruptcy representation in South Miami, this is far from accurate.

The first thing a creditor must understand about bankruptcy is that a debtor simply filing for bankruptcy creates what we call an “automatic stay.”  This is a court-imposed, automatic injunction that forces all creditors to cease their collection activities entirely.

The good news is that creditors may file a motion with the bankruptcy court to grant relief from the automatic stay. As a result, creditors can begin their collection or litigation activities once again.

In debt collection situations, it remains exceedingly essential for creditors to seek relief from an automatic stay as soon as possible. This can help them expedite their debt collection processes versus the alternative, waiting for liquidation and the conclusion of the bankruptcy proceedings.

Additionally, creditors should seek an attorney’s professional, expert assistance providing creditor bankruptcy representation in South Miami for the best possible outcome.

What Rights Does a Creditor Possess During Bankruptcy?

Creditors still maintain some protections as debtors file for bankruptcy. One of the conditions for receiving debt discharge is paying down as many debts as the debtor can. For this reason, creditors possess the right to receive a portion of whatever the courts distribute from the debtor’s bankruptcy estate.

The claims with the highest priority reflect secure debts. This is a debt that has collateral attached to it. Think about cars, houses, etc. This thinking is because a debtor can use the collateral to pay off at least a portion of the debt, if not all of it.

Unfortunately for some creditors, unsecured debt with no collateral attached carries the lowest priority. This unsecured debt often includes credit card debt, in addition to a majority of bills. Creditors that possess unsecured debts may receive little to no payment on the debt owed if their debtor declares bankruptcy. 

Additionally, debtors may continue facing debts with the inability to discharge them. Some of these include student loans, as well as child support debts. Creditor bankruptcy representation in South Miami will help creditors determine where their debt resides in the bankruptcy estate pecking order.

Do You Need an Attorney When You Receive a Bankruptcy Notice from a Debtor?

When a creditor receives a bankruptcy notice regarding their debtor, they should immediately cease any collection activities, including billing, phone calls, as well as any lawsuits concerning the debt.

An attorney providing creditor bankruptcy representation in South Miami, or Miami-Dade will then file a claim with the bankruptcy court. Unfortunately for numerous creditors, the timeline for filing deadlines in bankruptcy cases remain very short, as well as strictly enforced by the court.

Enlisting an attorney is the best way to achieve a positive outcome when creditors receive a bankruptcy notice. This legal professional can guide the creditor through the different types of bankruptcy cases, as well as an outline if a debt is secured or unsecured.

While no attorney can make promises about the outcome of the case, they will also likely possess some idea regarding the amount the creditor stands to recover. Finally, creditor bankruptcy representation can represent the creditor’s best interests in court, should they file a lawsuit.

Creditor Bankruptcy Representation in South Miami from the Law Offices of Paul A. Humbert, P.L.

A debtor filing for bankruptcy and attempting to still reclaim some or all of the debt is no easy task. In these situations, creditors should, without question, seek creditor bankruptcy representation in South Miami to guide them through such a tumultuous situation.

Our firm, the Law Offices of Paul A. Humbert, P.L. work to help defend creditor rights in bankruptcy situations. We represent a wide variety of clients, large and small. To learn more about what our attorneys can do for you, contact our firm today to schedule a consultation.