Experienced New Jersey Bankruptcy Lawyer Explains Creditors’ Rights to Clients in Debt
When you are in debt, you know the harassing phone calls from collection agents are out of control. You know you lay awake at night trying to come up with a solution for how to keep a roof over your family’s head and food on the table. You know that you owe far more than you earn and it’s not going to get better unless you exercise your legal options regarding debt management. An experienced bankruptcy lawyer can explain all of your options, including the benefits of filing for Chapter 7 or Chapter 13 bankruptcy protection as well as debt negotiation, debt consolidation and debt settlement.
However, during what is sure to be a stressful time for your entire family, it’s important to get the answers to questions you don’t know. Because, as they say, what you don’t know, can and will hurt you. Speak to Joel R. Spivack, Esq. about your unmanageable debt to learn more options. Additionally, he can assist you with understanding your creditors’ rights so you understand what you are truly up against.
Common Questions Regarding Creditors’ Rights in Camden County, NJ, and throughout the New Jersey
A creditor is a person or entity who has provided you with goods and services in return for a promise (credit) that you will pay them back according to a pre-set and agreed upon schedule between you, the debtor, and them, the creditor. A creditor can be the bank that holds your mortgage, the auto financing company that leased you your vehicle, a doctor or hospital that is looking to collect medical debt, credit card companies and many other entities. When you signed the promissory note or took on the debt, you gave the creditor the right to come after you to collect the debt.
However, the creditor’s rights change when you file for Chapter 7 or Chapter 13. When you file for bankruptcy, the creditor’s rights are diminished but not extinguished. Here is a list of common creditor’s rights regarding popular topics.
How is the creditor affected by the automatic stay?
When a debtor files for bankruptcy protection, the automatic stay prohibits the creditor from continuing to attempt to collect the debt in question. Agents acting on behalf of your ex-spouse trying to collect past-due alimony or child support are exempt from the automatic stay. Further, a creditor has the right to petition the court for the ability to continue to try to collect on the debt. If the court grants the creditor’s request, then it will have the right to go back to trying to contact you.
Can a creditor try to collect on a judgment after you’ve filed for bankruptcy protection?
No, once the bankruptcy proceeding has started, creditors may not attempt to collect on judgments. However, depending on the type of debt in question – secured or unsecured debt, for example – a creditor may be entitled to repayment as part of the bankruptcy resolution.
Is a creditor allowed to foreclose on property once the debtor files bankruptcy?
This is a two-fold “no” answer – at first. When a bankruptcy is filed, a creditor is neither permitted to continue with already-in-process foreclosure proceedings nor can it initiate foreclosure proceedings against a debtor who has filed for bankruptcy protection. Instead, a creditor must wait to see whether the bankruptcy filing is under Chapter 7 or Chapter 13, which will determine if the debtor will be required to repay of the mortgage or other real estate related debt as part of a restructuring agreement. If it is determined that the debtor has filed for Chapter 7 protection, the creditor has the right to file for a Motion for Relief from the Automatic Stay. If they are granted the motion, they can proceed with the foreclosure.
What are a creditor’s rights regarding lien stripping?
Lien stripping is a process that can occur during Chapter 13 bankruptcy proceedings. When the debtor attempts to eliminate debts (or liens) such as second or third mortgages on a property in an effort to avoid foreclosure. Second or third mortgages are not secured debt and therefore it’s possible for a debtor to get them eliminated. So, if the debtor filed for Chapter 13 bankruptcy protection, and the lien in question is on the debtor’s primary residence, is considered a junior, unsecured debt, and the property value is lower than the sum of the secured liens, the creditor really cannot stop the debtor from attempting to eliminate (or strip) the lien.
Are there any situations where debts are non-dischargeable in bankruptcy? What are a creditor’s rights in these situations?
Yes, there are exceptions to what can be discharged in bankruptcy. Tax liens and tax bills, alimony and child support, student loans and several other types of debt are non-dischargeable in Chapter 7 bankruptcy. Many of these same non-dischargeable debts apply to Chapter 13 bankruptcy as well.
Can debts that were not listed in the bankruptcy petition still be discharged?
In most cases, any debt not included in a bankruptcy filing would not be routinely discharged. Therefore, the creditor still has the right to what it is owed. However, in most cases, the bankruptcy court will likely discharge all non-secured debts because a Chapter 7 bankruptcy includes no payment plan and therefore you won’t be required to pay back the debt in accordance with your bankruptcy proceeding.
What are the creditor’s rights with regard to the 341a Meeting (meeting of the creditors)?
All creditors have the right to attend this meeting and question debtors during the proceedings. However, there is limited time granted for creditor participation and while a creditor has the right to attend, there is not usually a benefit to do so. If a creditor is truly looking to obtain information about the debtor’s situation, it can do so more appropriately by seeking approval from the court to hold a debtor’s deposition.
If the debt is secured by another party who is not involved in the bankruptcy, can the creditor still go after the debt from the third party?
In Chapter 7 bankruptcy, the answer is “yes.” However, in Chapter 13 bankruptcy, the automatic stay actually extends to protect third party guarantors. The only way a creditor can pursue the third party, in this case, is to petition the court for permission.
Struggling With Debt in Camden County NJ? Bankruptcy Lawyer Joel Spivack Explains Your Rights
Creditors have many rights when debtors file for bankruptcy protection, but you – as the debtor – have more. It’s critically important to understand the protections afforded to you by Chapter 7 and Chapter 13 bankruptcy so you do not get taken advantage of by a creditor who decides not to follow the rules.
Contact the Law Office of Joel R. Spivack Esq. for a free consultation about your financial situation today. The meeting is confidential and the advice will be priceless.