Debt Claim
Bad Debt Consolidation by splinder
Filed under Debt Consolidation
As per the US Bankruptcy Code list, debt claim is first paid to the secured creditors. Secured creditors issue credit in lieu of property or other assets. These claims are settled by selling off the assets. The amount left is maintained as a debt against the borrowers, who stay obligated for paying it.[br]
Once debt claims of secured lenders are settled, unsecured claims are settled in the following order:
- The administrative fees and other expenses incurred during filing for bankruptcy.
- Unsecured lenders that forced an involuntary bankruptcy.
- Employees and salesperson that had stalled wages. However, the wages should be earned within 180 days of filing for bankruptcy. There is a limit of $10,950 for each individual. Debt claims in excess of $10,950 are categorized as general unsecured claims.
- Employee benefit plans. These are limited to contributions of up to $10,950 per employee.
- All the taxes that had been recently incurred. This includes sales, income, gross receipt and employment taxes.
This priority based system of settling debt claims make the debt collection process more organized and transparent. However, creditors should know that the debt claims should be made within a certain time (different countries have different deadlines.)
Situations when Creditors Can Ask for Debt Claim
Creditors have been given the power of forcing bankruptcy on borrowers if the debtors fail to pay their credit. If creditors choose not to use this power, they can approach the local courts for getting the claim process legalized. Creditors can also file for claims under the following circumstances:[br]
- Loan defaulters
- Bad workmanship
- Property damage
- Road accidents
- Personal injury
- Unsupplied goods
- Faulty goods
There are other ways of collecting debt claims if creditors do not want to approach a court. These procedures are equally effective at resolving disputes and complaints. They are:
- Arbitration
- Mediation
- Settlement schemes
They are collectively called Alternative Dispute Resolution (ADR) schemes. In recent times, many websites have come up that let creditors file for debt claims online and collect their claims as per the prescribed order.