What a Creditor Must Find out About Chapter 7 Bankruptcy

Even though, I've experience as a Las Vegas bankruptcy attorney, the info here's standard in all 50 states. However, if you have legal questions you need to contact a local attorneyTo get blunt, when each of your customers or clients files for a Chapter 7 bankruptcy, and you also have no security lien filed, it is probable that you are not going to reimbursed. Nevertheless, under specific situations you may acquire some dollars back. I will make clear thejobof a bankruptcy trustee and his position in you receiving paid back any bill that is due to you.

Every time a borrower files for a chapter 7 bankruptcy the case is then provided to a trustee. 11.U.S.C.§§ 701,704. The trustees job is to use any nonexempt property, that the debtor has, and sellthose assets to repay any creditors. A normal individual who files a chapter 7 doesn't have any assets. In that case, the trustee will file a "no asset report", with the bankruptcy judge, and you are therefore out-of-luck.

Nonetheless, it gets a lot more complex when a debtor has possessions, that can be not exempt from liquidation. Thus, whenever that comes about the Trustee collects up all nonexempt property, sells the property, and then offers the profits to the creditors.A trustee has authority to put in force certain rules within the bankruptcy code. One particular power could be the "avoiding powers." To clarify this power I need to first provide you with a brief history of chapter 7 bankruptcy policy for the preferential treatment of creditors. Under chapter 7 there might be not preferential treatment of creditors. Simply, you cannot payback your best friend and never pay the entire content of your creditors. This "preferential treatment" is actually good within 90 days of times you file you request for bankruptcy. Thus, with a trustee's "avoiding powers" they can set aside any preferential payments to creditors which can be produced within 90-days of filing your bankruptcy petition. Additionally, if a business files for chapter 7 bankruptcy a trustee may, at their discretion run that business for a restricted time frame. 11 U.S. C. § 721.

Assuming that the debtor does indeed have nonexempt property the trustee will then deliver any income, gained through the sale, to the creditors. Section 726 of the Bankruptcy Code governs this kind of process. Under the § 726 provisions of the bankruptcy code there are sixclasses of claims to the assets. Each one of these classes should be settled previous to they can look to the following class. So, being a lender, you will only be paid if all other classes happen to be paid fully.

In summary, being a lender, you probably won't be repaid any debt that is owed to you when a chapter 7 bankruptcy is filed. based on how much debt that is owed to you it might be useful that you can pay an lawyer to determine to your interests. Even so, hiring an legal practitioner may likely not be of great benefit if you are merely owed $1,000 as the expense of legal fees might in all likelihood exceed any money you can find back from the debtor. Moreover, for those who have any concerns you have to phone a community attorney and he provides you with your entire choices. I would highly reccomend that if a substantial amount is owed to you that you consult a Las Vegas bankruptcy attorney.