Bankruptcy Creditors
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Filed under Bankruptcy
Contrary to the notion that creditors are at a loss whenever bankruptcy is filed, creditors have rights against bankruptcy pursued by their debtors. Right from disputing the charges and getting them declared ‘non- dischargeable’ to asking for their claim in the distribution from liquidation, ‘bankruptcy creditors’, as they may be called, possess special rights to cover up their losses.[br]
Vested Powers: Bankruptcy Creditors
The law has vested the following powers with creditors:
· Claim their share of debt: As a creditor, one receives the debt in the order of priority. Secured debts are paid first, followed by insecure debts. Creditors should know that non wage claims and unsecured loans come low in the priority list.
· Creditors are heard by the court when ever a debtor files for bankruptcy under the chapter 11, 12 and 13. They are also heard in cases of liquidation of debtor’s non exempt assets and payments from their assets.
· Creditors can also file ‘non-discharge-bility’ petition against the debtors on various grounds including exceeding credit limit in months just before filing for bankruptcy.
The law clearly defines the conditions under which creditors can impugn and dispute. However, it has also issued directives that need to be respected whenever a debtors files for bankruptcy.[br]
Things Bankruptcy Creditors Must Know
If they have been given power to dispute, creditors have also been asked to respect a protocol that debtors are protected through. Below are a few things that bankruptcy creditors need to be careful about:
· Cease all collection activities that include calls, law suits or billing: Debtors and their property are protected by the ‘automatic stay’. In fact, in Chapter 13 bankruptcy, the stay protects the co-debtors as well.
· Use court to file claims: Creditors, at no cost, should approach the creditors for any form of collection. As soon as the notice is sent out by the court, creditors must act quickly as deadlines are enforced strictly in bankruptcy cases.
· Produce proofs to the court: Claim form should have the attached proofs. If the claim form is not sent with the notice, it can be downloaded online.
Creditors can question debtors about liabilities, financial history and their assets. They also have power to schedule separate examination under Rule 2004 of the bankruptcy procedure.