Creditor Representation in Bankruptcy
Generally, a creditor has multiple avenues available with which to collect a debt that has become due, such as liens, garnishments, and attachments. Once a debtor files for bankruptcy, however, the creditor is subject to a whole new set of rules in order to collect on a debt. The filing of a bankruptcy petition puts any debt collection actions on hold; if the creditor wants relief, it must now pursue its claim through the bankruptcy proceeding.
Bankruptcy cases are filed in a special Federal Bankruptcy Court, and a huge volume of laws known as the Federal Bankruptcy Code governs the proceedings.
The success of a creditor in bankruptcy court depends in large part on the status of the creditor (secured, undersecured, unsecured, administrative priority) and the particular chapter under which the bankruptcy was filed (chapter seven liquidation, chapter eleven reorganization, chapter thirteen adjustment). Secured creditors are those who have liens on the debtor's property which can be acquired if the debt is not paid. Secured creditors are in a better position than unsecured creditors in bankruptcy and have the potential to be paid before unsecured creditors.
An example of a secured debt would be a home mortgage. The debtor (homeowner) owes money to the creditor (lender), and the debt is secured by the home, which may be taken by the creditor and sold to satisfy the debt (foreclosure). A credit card is an example of unsecured debt. While the consumer may owe money to the credit card company, the consumer did not put up any property as collateral in order to receive the card, therefore the company does not have a built-in avenue to collect on its debt.
There is much more to protecting a claim in bankruptcy than simply filing it with the bankruptcy court. Proceedings must be closely monitored to make sure that any plan or order of the court does not adversely affect the creditor's rights. If a creditor objects to a provision in a plan, it must make a timely and appropriate objection in an attempt to preserve its rights.
The attorneys at Schuyler-Stewart-Smith focus on the area of creditor's rights and deal extensively with bankruptcy filings in the southern, northern, and middle district bankruptcy courts in Florida. Our lawyers know how to work with the courts and bankruptcy trustees to represent creditors and safeguard their rights. If you are a creditor whose debtor has gone into bankruptcy, contact the lawyers at Schuyler-Stewart-Smith, The Creditor's Rights Law Firm of Florida, P.A., for a consultation.
