A bankruptcy proceeding has two main purposes: to relieve individuals or businesses from their debts and to protect and preserve the rights of creditors and to provide them with equal and fair treatment in regards to their claims. Generally, a bankruptcy proceeding will attempt to strike a balance between a debtor’s obligation and his or her creditors’ rights. Although it’s true that once you file for bankruptcy and the automatic stay has begun, your creditors are prevented from taking any action against you to claim their debts; however, this doesn’t mean your creditors are without rights. In fact, creditors are entitled in a bankruptcy case to share in any distribution from your bankruptcy estate according to the priority of their claim, express their opinion in court concerning reorganization plans or the liquidation of your non-exempt assets, and challenge your right to a discharge of their debt. Sometimes, a creditor with just cause can even seek relief from an automatic stay and proceed with pursuing legal actions against you. Generally, how much protection the court can give creditors will depend on whether or not a claim is filed in a timely manner and whether or not the debt is dischargeable, non-dischargeable, secured, or unsecured.
©2006 Crossroads Mobile. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
