Irvine Chapter 7 and 11 Creditor Attorney

Navigating bankruptcy proceedings can be difficult, regardless of whether you are a creditor or a debtor. To ensure a fair outcome, you must take a variety of steps. As a creditor, you must know your rights in bankruptcy proceedings. Failure to do so costs time and money. 

Financial Relief Law Center, APC has experience in bankruptcy and insolvency law. Creditors are often affected when a client files for Chapter 7 or Chapter 11, but they deserve to have their businesses protected, too. Our skilled team has the legal know-how to help preserve a creditor’s rights in a bankruptcy. 

If you are a creditor who needs protection in a bankruptcy, contact our team online today. Our legal team serves Irvine and the surrounding areas, and we will work hard to make the system does not take advantage of your company.

Creditors’ Rights

Protecting creditors is an essential aspect of any functioning economy. Various laws protect individuals and businesses that offer credit to debtors. These protections can help make sure creditors are not left empty-handed when debtors file for bankruptcy or default on their financial obligations. 

Examples of Your Rights Include

The Right to File a Proof of Claim

This process can assert their right to receive payment from the debtor's estate.

The Right to Object to a Discharge

If a creditor believes that the debtor does not qualify for a discharge, they can officially object to it.

The Right to Object to the Debtor’s Exemption Claims

If a creditor believes the debtor has claimed unallowable exemptions, or those exemptions are excessive, they can challenge these claims.

The Right to Participate in the Distribution of Assets

Creditors have the right to be involved when the debtor's estate is distributed. This may include receiving a portion of property sale proceeds.

The Right to Challenge the Debtor's Bankruptcy Filing

In some cases, creditors have grounds to challenge the debtor's bankruptcy. They may believe the debtor filed in bad faith or that the bankruptcy petition is fraudulent.

Automatic Stay

Automatic stay is a legal protection for debtors. It automatically takes effect when the debtor files for bankruptcy. Stay forces creditors to plead to the bankruptcy court before taking any collection or enforcement actions against the debtor.

Creditors may seek relief from the automatic stay under certain circumstances, such as:

The Debtor Lacks Equity in the Property

If the debtor has no equity in the property that secures the creditor's claim, the creditor may argue that lifting the stay will not harm the estate.

The Property Is Not Necessary for an Effective Reorganization

If the property securing the creditor's claim is not necessary for the debtor's reorganization, the creditor may argue that lifting the stay will not harm the estate.

The Debtor Is Not Making Payments on the Secured Debt

The creditor may argue that lifting the stay will allow them to take action to protect their security interest.

The Debtor Has No Feasible Plan for Reorganization

The creditor may argue that lifting the stay will allow them to pursue their claim outside of the bankruptcy process.

To obtain relief from the automatic stay, the creditor must file a motion with the bankruptcy court and show cause for why the stay is invalid. The debtor and other parties in interest have an opportunity to object to the motion, and the court will ultimately decide whether to grant or deny the request for relief.

Our team can assist with filing such a motion. We know the law surrounding these matters, and we can help build a strong case against these stays.

Creditors deserve representation and protection. Often, bankruptcy law favors the debtor, leaving the creditor to deal with the losses. We respect the position this puts a creditor in, and we are here to help make sure you and your company are not abused in the process. To speak with our team in Irvine, call us now at (949) 787-1889 or schedule time with us online.