Protecting the Rights of Creditors and Reclaiming Debt
The media loves to portray creditors as the bad guys — greedy misers, mercilessly bullying the little guys they take advantage of, using phone calls and tough-guy tactics to collect money the little guy doesn’t have and shouldn’t have to pay back.
Popular culture is rife with collectors – from Ebenezer Scrooge to Scrooge McDuck — and it’s never a good depiction.
Even reality seems to favor the debtor, as an entire agency has been created to protect them, and rules have been put in place specifically targeting collectors. But that’s only one side of the story. Lexington creditors’ rights lawyers know there is a different side to the story. Businesses lend credit as a sign of trust that an individual will pay for the product or services they’ve used. When that money isn’t repaid — especially in the case of small businesses — the company’s bottom line suffers.
As a creditor, you may be forced to combat overdue consumer debt and pending bankruptcy proceedings. Recovering funds is essential to protecting your company’s livelihood. Lexington creditors’ rights lawyers at Bunch & Brock have the tough experience you need to reclaim the money you’re owed. Call us at (859) 254-5522 to discuss your case.
Let Lexington Creditors’ Rights Lawyers Help
At the offices of Bunch & Brock, Attorneys at Law, in Lexington, Kentucky, we offer powerful protection of creditors’ rights backed by more than 30 years of experience. Attorneys at our firm represent companies and corporations in matters ranging from securing preference claims and gathering collateral to launching litigation proceedings. To arrange a consultation with a lawyer skilled in protecting creditors’ rights, contact us online or call us at (859) 254-5522.
Here are steps to take when pursuing a debt:
- Collecting Debt: Creditors have several avenues for collecting what they are owed, but each depends on the level of debt and the debtor’s willingness to pay. Most remedies simply involve direct contact, but more difficult cases may involve the court system.
- Contact the Debtor: Many times, the only action necessary is a phone call. In this case the debtor simply needs to be informed that the debt is overdue.
- Collection Agency: If the debtor still does not pay, another option is a debt collection agency – a business which, for a percentage of the debt, will pursue the debt for you. These agencies are bound by the Fair Debt Collection Practices Act, meaning there are specific federal guidelines they must follow in pursuit of the debt.
- Repossession: If the loan is for property, for instance a car or furniture, the physical items may be repossessed. Before repossession may take place, there often must be court hearings and orders, but these are waived if the property is in danger of being damaged or destroyed.
- Courts: If all other tactics fail, then it is possible to sue for money owed. The court sometimes awards the creditor a portion of the debtor’s property in order to pay off the debt. If the debtor owes enough money to enough creditors, then the creditors may ultimately pursue an involuntary bankruptcy.
Lexington creditors’ rights lawyers can help create a strategy for collecting these debts, especially if legal action is required.
Creditors’ Rights Lawyers Can Explain the Different Types of Bankruptcy
If a debtor has declared bankruptcy, repayment often depends on the type of bankruptcy the debtor has filed. The two most common types of bankruptcy are:
Chapter 7: In Chapter 7 bankruptcy, a debtor’s property is liquidated and sold in order to pay off accumulated debt. While there are exemptions to what property can be liquidated, the court will generally repay creditors based on the criteria of the loans and money owed.
Chapter 13: In Chapter 13, a debtor is given a specific amount of time to formulate a plan to restructure, and, in the process, their loans may be renegotiated or forgiven. Depending on the plan, creditors may often expect full repayment, but it may be at a delayed time in the future.
Creditors’ Rights Lawyers Can Establish Preference Claims
U.S. bankruptcy laws allow specific creditors to receive payments before others do during a bankruptcy. Securing a “preference claim” (also known as a preference action) can allow you to recover and retain the payment you are entitled to before funds run out. Our firm diligently prepares necessary preference claim paperwork and aggressively negotiates or litigates on your behalf. To discuss this in greater detail with Lexington creditors’ rights lawyers, call (859) 254-5522.
Creditors’ Rights in Chapter 7
The manner in which debt collection agencies and creditors’ rights lawyers practice has evolved since the U.S. economic crash of 2008. These days, debt collectors are somewhat more sophisticated in seeking repayment, especially when it comes to debts for tangible goods and services rendered. The economic crash significantly increased the number of bankruptcies and caused the amount of consumer debt to rise among Americans.
Creditors have rights in Chapter 7 bankruptcy, particularly if they are priority creditors. These creditors are the first to be paid after a bankruptcy trustee liquidates the assets of a debtor. Creditors with secured collateral will be in better shape in these bankruptcy cases than are those with unsecured debt. Therefore, creditors who have made loans on houses, cars and machinery, for example, have a chance of recouping at least some of their money if the assets are sold.
However, creditors often have to deal with an “automatic stay,” which is a legal instrument that commences when a debtor files for bankruptcy and requires a creditor to cease all communication with a debtor and stop collections efforts.
Generally, time is of the essence for creditors when a debtor begins to have trouble meeting their obligations. The sooner you pursue debt collection, the better your chances are of reclaiming the money owed to you. Similarly, if a debtor files for bankruptcy, the sooner you hire a Lexington creditors’ rights attorney, the better positioned you are to mount a legal claim to funds that are due you.
Creditors’ Rights in Chapter 13
Chapter 13 bankruptcy is more favorable to creditors than is Chapter 7 because creditors’ rights are enhanced. Generally, people who do not qualify for Chapter 7 revert to filing Chapter 13. Under Chapter 13, the person who owes money restructures their debt and creates a repayment plan. As part of this, the debtor must turn over all disposable income to the bankruptcy trustee for three (3) years, and this income is used to repay outstanding loans and/or credit cards. A debtor must also disburse any increases in disposable income to creditors during this time and must seek permission from the bankruptcy court to pursue significant activities outside the ordinary course of business. So you see, a creditor’s chances of being paid tend to be higher under Chapter 13 bankruptcy.
Debtors may choose to “reaffirm” some pre-bankruptcy obligations, which means they plan to keep certain goods or honor the payments for services they have received. This turns the debt into a post-bankruptcy obligation. A creditor must exercise care in pursuing a debtor’s reaffirmation because there are court requirements to do so, and this is where Lexington creditors’ rights lawyers can help.
If you are in a lawsuit with the debtor prior to his filing bankruptcy, then the lawsuit must not proceed unless you seek permission from the bankruptcy court.
Creditors’ Rights in Chapter 11
Chapter 11 allows the debtor to have the exclusive right to file a debt reorganization plan for a period of four months (120 days). Creditors’ rights under Chapter 11 include the right to file a competing reorganization plan. Because of this, there is an incentive for the debtor to act quickly and come up with an early plan to repay creditors. The creditors’ rights to an alternative plan prevents purposeful delay by the debtor.
In most cases, secured creditors have rights based on a mortgage, deed of trust, a judgment lien, or a security agreement on property such as a motor vehicle or heavy equipment.
In a Chapter 11 case, the bankruptcy trustee holds a meeting with creditors to review the debtor’s plan and schedule for repayment. The debtor is required to answer questions under penalty of perjury during this meeting, which creates an incentive for the debtor to be transparent and forthcoming.
Pursuing Bankruptcy Litigation
Because of the different criteria used when courts allocate repayment or are simply trying to collect an individual debt, the help of Lexington creditors’ rights lawyers is often indispensable in making sure you receive the debt you are owed. Bunch & Brock’s focus when representing creditors’ rights is to help you receive the money you are owed in the most effective and efficient manner possible. When negotiation techniques are not enough, we do not hesitate to bring a matter before the courts.
Lexington creditors’ rights lawyers at our firm are prepared to assist you with bankruptcy litigation matters involving …
- Relief from stay: challenging automatic stays granted to debtors
- Adversary proceedings: arguing the discharge of certain debts
- Lien avoidance: challenging a debtor’s attempts to remove liens
- Bankruptcy reclamation: collecting property sold to a debtor
- Fraudulent conveyance: pre-file transfers made with intent to defraud.
Creditors’ Rights in Bankruptcy
The bankruptcy code provides significant protection to creditors dealing with unpaid debts. Bunch & Brock can help you understand how to fully protect your rights during bankruptcy proceedings. With more than three decades of experience litigating from offices in Lexington, the attorneys at Bunch & Brock are familiar with creditors’ rights in bankruptcy in Kentucky. We have the knowledge, experience and resources to help you receive the full repayment you deserve. If you have any questions or would like to set up a consultation, contact us online or call us at (859) 254-5522.
Protect Your Rights — Contact Bunch & Brock
The bankruptcy code provides significant protection to creditors dealing with unpaid debts. Courts recognize creditors’ rights in bankruptcy. Bunch & Brock can help you understand how to fully protect your rights during bankruptcy proceedings. To arrange a consultation, contact us by telephone at (859) 254-5522 or use our online form.