Individuals filing bankruptcy receive the immediate protection of an “automatic stay,” a legal force field that prevents creditors from collecting on debts until the bankruptcy is dissolved. The automatic stay can delay a home foreclosure or vehicle repossession while the debtor gets his financial affairs in order. However, creditors also have rights in the equation – under certain circumstances, they can request relief from the automatic stay and collect on the debt. When creditors get notice of the bankruptcy, their rights will depend on the nature of the bankruptcy (which Chapter), and the type of debt owed (secured or unsecured).

Also, a secured creditor may be able to file a claim for relief from the automatic stay, such as when a debtor in a Chapter 13 repayment plan isn’t making their house or car payment to a creditor outside of the repayment plan. The creditor must show “cause” (non-payment, no insurance, etc.) for granting the relief, which will form the basis of a hearing at which the bankruptcy judge will decide whether to grant such relief. Note that without obtaining such relief, it is illegal for a creditor to even send a letter to a debtor requesting payment.

A creditor must also determine whether the debt is dischargeable. If the debt is dischargeable, the creditor has options to try and prevent discharge of the particular debt. For example, if the debtor incurred the debt by dishonesty, fraud, or other intentional “bad acts,” the creditor may contest discharge of that debt. Another claim of which the creditor may contest discharge is one which is not a support claim resulting from divorce.

If you have creditor’s threatening you, and want to know your rights, or if you need an experienced bankruptcy attorney to protect your rights as a creditor, give the Dothan legal team at Boles Holmes White a call at 334-366-6086 or email us today. We can assist you with your creditor rights issues, and we offer a free in-office consultation.