What a Creditor Should Know When Receiving a Bankruptcy Filing
Bankruptcy is never a pleasant time for any party involved, especially if you are a creditor. Filing for bankruptcy usually means that creditors will not be paid back in full, though that may not be the case in all scenarios. As a creditor, getting the notice of a bankruptcy filing is an essential first step in understanding what your rights are and what avenues to take to get some of the money that you deserve. By hiring an experienced lawyer from the ADLI Law Group, you can rest assured knowing that we will work to ensure that you are not getting paid less than you legally deserve as a creditor, and we’ll do our best to uphold and honor your creditors’ rights with our team of litigation lawyers. In this blog post, we’re going to explore what to know initially after receiving a bankruptcy filing.
First and Foremost
First things first, it is important to realize that once you receive a notice of a bankruptcy filing, there is now a federal court injunction. This means that you are only able to pursue your claim in bankruptcy court, not anywhere else. If you attempt to do so, you (the creditor) are violating an automatic stay. An automatic stay prohibits any further action from the creditor towards the debtor and the debtor’s property. The creditor has no right to continue to collection activities, unless it is in bankruptcy court. You should then file a proof of claim that was sent to you by the county clerk with which the bankruptcy was filed. Deadlines are strictly enforced, so pushing this back could have adverse effects on your capabilities for repayment as a creditor. Then, you should recognize and familiarize yourself with what chapter the bankruptcy was filed under.
Chapter 7, 11, & 13
As discussed in our previous blog post, there are a variety of different kinds of bankruptcy filings. Chapter 7, 11 & 13 affect the role in which a creditor plays. Chapter 7 allows for a “fresh start”, as the debtor absolved of debts due to a liquidation of all of the assets to a trustee. The trustee represents the creditor, appointed by the Department of Justice, and is able to sell the assets for the creditor. Chapter 11 allows the debtor to continue operating their business, but outlines a plan for the creditor to receive payment over time. This is how it get its “reorganization bankruptcy” title. Chapter 13 is common for debtors as it provides protection against the collection and wage garnishment efforts from the creditors, but similar to Chapter 11, it repays the creditor in a payment plan. However, this repayment can take a longer time frame than the latter two.
ADLI Can Protect Your Rights as a Creditor
Getting an attorney can help provide the knowledge and experience necessary to protect your rights as a creditor. At ADLI, we have both experience and knowledge to work with the complex nature of bankruptcy cases. As a creditor, you have rights.
To discuss a bankruptcy filing as a creditor with a lawyer, contact ADLI Law Group today.