Protecting the creditor's rights during bankruptcy
Bankruptcy is a valuable tool for debtors trying to get a clean financial start and for businesses trying to reorganize and make themselves profitable. But often, unsecured creditors can suffer major losses when a debtor files for bankruptcy. And bankruptcy filings are on the rise. In Florida alone, there were over 113,000 bankruptcy filings in 2010. Most of those were individuals filing for Chapter 7 or Chapter 13 bankruptcy but there were still over 4,400 business filings across Florida’s three federal districts.
Now more than ever, creditors must protect their rights when dealing with an insolvent creditor by contacting an experienced bankruptcy attorney. Having counsel and representation from a skilled bankruptcy attorney at Burke Blue can help creditors ensure bankruptcy courts recognize their claims, protect their rights during the process and minimize their losses.
How bankruptcy affects creditors
When a business or individual owes money to a creditor and declares bankruptcy, it can have a variety of effects depending on the type of bankruptcy and the financial condition of the debtor. The most common type of bankruptcy is Chapter 7, also called liquidation. During Chapter 7 proceedings, a debtor must usually account for and sell most of its unsecured assets, subject to some statutory exceptions. A United States Trustee then distributes the proceeds of this sale to creditors according to the priority established in the Bankruptcy Code. Once the trustee distributes all the proceeds of sale, the court may discharge any remaining unsecured debts.
This, of course, can create problems for unsecured creditors as there are rarely enough assets for all creditors to be paid in full. That is why having skilled representation from a knowledgeable bankruptcy attorney is so crucial. While it is often not possible to recoup all money owed, experienced bankruptcy attorneys can help creditors take full advantage of their rights under the Bankruptcy Code.
Other types of bankruptcy
While not as common, Chapter 11 and 13 bankruptcies can also have a substantial impact on creditors. These types of bankruptcy proceedings allow a higher degree of participation and oversight by creditors. The experienced bankruptcy attorneys of Burke Blue can help guide clients through the creditor side of the process. Taking advantage of this opportunity to participate with the help of a Burke Blue lawyer may help creditors receive a more favorable return of the amounts owed.
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