3 March 2020
Bankruptcy Brief: The Creditor/Debtor Relationship
The relationship between a creditor and a debtor is vital to understand in order to achieve operational excellence. Simply put, a creditor is the party whom something is owed by the debtor. Conflict arises when the debtor is not able to repay what was agreed upon with the creditor. When this happens, the process of debt collection may begin – at which time, additional avenues of repayment may be explored. It’s possible for the creditor to force payments through means of garnishing property, wages, and bank accounts to meet the amount owed. The creditor is likely willing to seize anything that the debtor owns in order to obtain adequate repayment, albeit the debtor will seek to protect their property.
Often times, the debtor is no longer able to pay on debts owed because of a major life event – such as a sickness leading to massive medical bills, job loss, divorce, etc. Nonetheless, when the creditor/debtor relationship turns sour and the debtor has far more debts than accessible funds to cover them, the debtor may turn to filing for bankruptcy.
Most bankruptcies are filed under Chapter 7 or Chapter 13. As a creditor, it’s important to understand the differences between the two, and how it will affect both you and your debtor – eligibility to file, length of time, what happens to personal property, and so forth. Furthermore, it’s also crucial for creditors to understand what they can and can’t legally do, as well as next steps.
Simplifying the bankruptcy recovery process, a debt collections attorney can help you navigate the intricacies by examining your bankruptcy accounts and advising you throughout the way. A qualified attorney will help you weigh the options, advocate on your behalf, and ultimately obtain high recovery rates. Consider an attorney that also manages your reaffirmation agreements, objections to confirmation, and defense of motions to redeem. Lastly, find an attorney that is properly licensed to both practice and file in the necessary states and jurisdictions that you need.
Take the time to familiarize yourself with your rights as a creditor in a Chapter 7 or 13 bankruptcy.
Often times, the debtor is no longer able to pay on debts owed because of a major life event – such as a sickness leading to massive medical bills, job loss, divorce, etc. Nonetheless, when the creditor/debtor relationship turns sour and the debtor has far more debts than accessible funds to cover them, the debtor may turn to filing for bankruptcy.
Most bankruptcies are filed under Chapter 7 or Chapter 13. As a creditor, it’s important to understand the differences between the two, and how it will affect both you and your debtor – eligibility to file, length of time, what happens to personal property, and so forth. Furthermore, it’s also crucial for creditors to understand what they can and can’t legally do, as well as next steps.
Simplifying the bankruptcy recovery process, a debt collections attorney can help you navigate the intricacies by examining your bankruptcy accounts and advising you throughout the way. A qualified attorney will help you weigh the options, advocate on your behalf, and ultimately obtain high recovery rates. Consider an attorney that also manages your reaffirmation agreements, objections to confirmation, and defense of motions to redeem. Lastly, find an attorney that is properly licensed to both practice and file in the necessary states and jurisdictions that you need.
Take the time to familiarize yourself with your rights as a creditor in a Chapter 7 or 13 bankruptcy.
For more comprehensive information and insights, watch part I and II of our Ask a Pro: Navigating Chapters 7 & 13 Bankruptcies webinar series here and here.