One of the most common mistakes that creditors make in bankruptcy is that they give up when they receive a filing notice. The common assumption is that you have no rights against the debtor, but that’s not the case.
Creditors in Bankruptcy Can:
They can take a share in any distribution depending on their claim from the bankruptcy estate. It’s worth noting that non-wage claims, generally unsecured ones, might provide very little or no benefit as they have the least priority.
According to chapters 11, 12, and 13 of the debtor’s plan, they can be heard in court. These involve paying for dues from estate assets and liquifying any non-exempt assets that the debtor had.
What Should A Creditor Do?
Cease Collection
The automatic stay occurs when the debtor files for bankruptcy, which protects the debtor and their assets from collection. According to Chapter 13, any co-debtors are also protected from consumer debts.
File a claim
You’ll need to be quick in the event of a bankruptcy case, deadlines are taken care of, and you wouldn’t want to be late. The bankruptcy notice provided by the court clerk informs you where you can file the proof of claim along with the prescribed deadline for it.
Figure Out If Your Claim Is Dischargeable.
Different types of claims are non-dischargeable in a Chapter 7 bankruptcy case, including divorce obligations, debts due to malicious acts, fraud, or drunk driving. As previously stated, deadlines are fairly brief and strictly followed, so reach out to your lawyer if your claim is within the category mentioned above. You’ll have to file an adversary proceeding for preserving the claim.
You can find an exhaustive collection of debts not dischargeable in Chapter 7 in 11 U.S.C. 523.
Figure Out If the Debtor’s Assets Secure Your Claim
In many cases, secured creditors have access to real estate properties, personal properties with the help of a lien, which grants them rights to the collateral for the claim. Because of this, they can get relief from the protection payments and automatic stay when the debtor files for bankruptcy.
These generally help prevent the decline of equity and prevent the creditor from going into a loss when trying to foreclose on any assets.
At McLeskey Law Offices, we are a creditors rights law firm based in Columbus, Ohio, experienced in probate law and creditors rights. When it comes to bankruptcy cases, we help our clients get their due share if they meet the required conditions. Reach out to the business today if you seek a creditor’s rights or litigation lawyer.