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Four Things You Should Know About Creditors When You File for Bankruptcy

On Behalf of | Jan 16, 2017 | Bankruptcy, Credit, Education |

When you file for bankruptcy, it’s essential to know what you may encounter throughout the process. This includes what rights your creditors have and how they may exercise them. Here are four things you should know about creditors when you prepare to file for bankruptcy:

They’re Entitled to Three Big Things
During the bankruptcy process, creditors are entitled to a few things. These include a share in any distribution from the bankruptcy estate according to the priority of their claim, the right to be heard by the court in matters concerning your plan (if you’re filing in Chapters 11, 12, or 13), and the ability to discharge your particular debt.

They Should Cease Any Collection Action
When you file for bankruptcy, your creditors must cease any effort to collect the debt, including telephone calls, billing, and law suits that might be pending against you. That’s because you and your property are protected by the bankruptcy code’s automatic stay, which shields you from all forms of collection during the bankruptcy process. If you’re filing a Chapter 13 bankruptcy, the stay will also protect any co-debtors on consumer debts. One of our specialties at the Bankruptcy Advocates is bringing suit against creditors who violate the automatic stay.

They Will Consider Whether Their Claim Is Dischargeable
Regardless of what type of bankruptcy you file, certain claims can be non-dischargeable. This means that the creditors’ claims will survive a bankruptcy filing. These include obligations from a divorce or separation agreement or claims that were the result of fraud.

They Will Keep an Eye on Your Case
If your bankruptcy case is dismissed because you failed to comply with the bankruptcy code’s requirements, creditors will be free to collect the debt as if bankruptcy had never been filed. Additionally, cases originally defined as “no asset” can turn into asset cases from which a dividend may be paid to creditors. For example, your boyfriend or girlfriend may have given you the winning lottery ticket for your birthday, and you thought it was worthless at the time that you filed!

Filing for bankruptcy doesn’t have to be frightening or difficult. We at Bankruptcy Advocates can help! Call us today for a free consultation at (618) 549-9800. We can help you determine if you need to file for bankruptcy, guide you through the entire process, and help you gain control of your life once again.