Knowledge on Creditor’s Rights Can Protect us from Bankruptcy

If you are unfortunate enough for your debtor being insolvent to repay, the court can organize the proceedings with his or her estate (property and other assets) for your benefit. But the non-payer may attempt to file bankruptcy case against you and resolve hopeless financial situation.  Now you as a creditor may claim in a bankruptcy action the right to payment or court ordered remedies. Your success in claims depends on whether you have secured or unsecured claims. Consult with your Bankruptcy Lawyer to know more about your legal rights in your area.

What is Secured Claim?

Here the creditor has a lien on property of the debtor. Means you have the rights to be paid from the property before ant unsecured creditors can have. You can be entitled to receive the value equivalent to the amount of the debt or collateral value which ever is smaller.  Lien is a type of security interest that protects the payment of a debt. For example mortgage on real estate; security interest in other tangible properties.

What are specific rights and advantages against general creditor?

In a bankruptcy case all creditors enjoy certain common rights, but there are some additional rights too as secured lien as follows:

  • Deed of trust or mortgage on real property
  • Security agreement on personal property, such as a car
  • Judgment lien

What are the other Protections?

The secured creditor can:

  • Stop the debtor from using cash collateral
  • Ask for money if the trustee’s use of the secured property has lower value than the debt
  • Claim attorneys’ fees and interest that accumulate or arise both before and after the bankruptcy case starts

What is chapter 7 Bankruptcy?

If you have very low income and want to liquidate your assets, to pay off your debts you can file chapter 7 bankruptcy. You can also go for Debt Consolidation Denver solution program. All your non-exempt properties will be sold and liquidated. A trustee will be appointed to supervise your property. You have to surrender some of your assets to the trustee, and the latter will sell them and pay your creditors.

Generally the debtor can have 3 revival options with secured creditors. These are reaffirmation, redemption and surrender of property. It means the debtor has to pay within or outside reorganization plan as the law suggests.

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