Leading Financial and Family Law Attorneys
Protecting creditors’ rights in bankruptcy – part 1
Last fiscal year there were almost 800,000 new bankruptcy filings in the US
Who fights for creditors’ rights? New Mexico Financial Law does.
All too often a creditors receive a notice of bankruptcy and think it’s the final word in the matter. However, creditors have rights too, and there are several elements to consider about your debtor’s claim from a legal point of view.
What are a creditor’s rights in a bankruptcy proceeding?
- Creditors are entitled to a share of the bankruptcy estate’s assets. How much they will receive is determined by the priority of their claim.
- Creditors have the right to have their voice heard by the court when it comes to the debtor’s repayment plan (in a chapter 11 or 13 filing), the handling of payments from the bankruptcy, and the sale of non-exempt assets.
- Creditors have the right to challenge a bankruptcy discharge under certain grounds.
What should you do if you receive a notice of bankruptcy?
- First and foremost, you should speak with a qualified bankruptcy attorney to ensure your rights and interests are protected.
- Cease all collection actions. Debtors are protected from collections during the bankruptcy process. This is called an automatic stay. In chapter 13 bankruptcy filings, the automatic stay also protects co-debtors.
Check back soon for Protecting creditors’ rights in bankruptcy – part 3