What Rights Do Creditors Have in Bankruptcy?
Filing for bankruptcy offers you relief from debt when you are not able to pay it due to a certain reason. It puts a stay on your assets, meaning that your creditors will not be able to deduct any amount of money from your bank account or go after your assets.
But it doesn’t relieve you from the debt altogether. You still owe it and are legally responsible to pay it either partially or fully depending on the court order. Besides, it also limits your options for getting a loan at the subsequent stages.
Both businesses and individuals can file for bankruptcy as the last resort in the event of failure to pay a debt. When you opt for this option, you need to focus on several aspects. Primary among them are Chapter 7 bankruptcy and Chapter 13 bankruptcy.
What happens when you file a Chapter 7 bankruptcy?
Chapter 7 bankruptcy relieves an individual from debt when they have a little disposable income or no income at all. For filing this type of bankruptcy, an individual needs to meet the criteria concerning, their income, their state of residence, and the significance of their assets to them.
Despite an exemption from a major component of your debt, you will still need to pay a part of it. This will most likely be recovered by liquidating your assets.
The liquidation of your property will depend on whether or not a trustee can sell it. If they find it difficult to sell it off, they may ask you to pay an equivalent sum of money, allowing you to keep the property.
As regards the rights of a creditor, they can receive a certain part of the debt by the liquidity of a debtor’s assets. A debt settlement attorney or any other place in the United States can provide information about it in detail.
What happens when you file for Chapter 13 bankruptcy?
Chapter 13 bankruptcy protects the assets of a company and allows it to continue its operations if it fails to pay off its debts. It provides a business owner with a plan to pay off their debts systematically over a period of three to five years.
However, to be eligible for filing Chapter 13 bankruptcy, one must meet certain criteria. For instance, one’s secured debt must not exceed the $1,149,525 mark, and the unsecured debt must be either $383,175 or less in value. Moreover, they should either place their house or car as collateral back up for secured debt.
A creditor either receives the payment in part or full depending on the merit of an individual’s case relating to Chapter 13 bankruptcy. You can learn our previous blog to understand the difference between chapter 7, 11 and chapter 13 bankruptcies.
It is recommended that you hire an attorney who is well aware of the local laws pertaining to this type of bankruptcy. For instance, a Chapter 13 bankruptcy attorney will be the right choice if your area of residence is under the jurisdiction. Likewise, you can hire a qualified attorney based on your area of residence in the other places in the United States.
Reach out to a qualified attorney for debt relief and foreclosure in Ventura County and Los Angeles.
While legal cases involve tons of technical jargon and complexities, they also provide you with rights and possibilities. Reaching out to a lawyer is your best bet to evaluate your options.
A qualified Chapter 7 bankruptcy attorney can help you file Chapter 7 bankruptcy. Plus, they will also offer you valuable legal advice and let you know about the options that you can utilize to stay clear of legal troubles.
For assistance in filing for bankruptcy or foreclosure, consider the services of a NATHAN A BERNEMAN, APC.