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In addition to the debtors, creditors in bankruptcy also have certain rights and privileges. They are permitted to the following:

• Share in the bankruptcy estate which is based on the priority of the claim.
• They are present in the court hearing related to debtor’s non-exempt assets, repayment plan, and sale of the bankruptcy estate.
• Object to the debtor’s debt discharge.

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After the bankruptcy is filed, creditors in bankruptcy are not allowed to contact the debtor and have to abandon any collection procedure that they were undertaking as filing puts an automatic stay order on these activities. You will soon receive a notice from the court telling you where you can file your claim proofs. This notification is accompanied by a deadline. You need to attach copies of contracts regarding your claim, details of the claim and supporting documents along with the claim form which can be downloaded from various websites.

The creditors also need to do some research such as whether their debt comes under dischargeable debt or non-dischargeable. Creditors in bankruptcy proceedings should also find out whether the debtor has sufficient assets to cover your claims. If a creditor thinks that the debtor has transferred his/her assets or about other such fraudulent activity, the creditor has the right to inform the trustee and challenge the discharge. There are also some rare cases in which the bankruptcy is dismissed as the debtor is not able to comply with the bankruptcy code. In that case, the automatic stay is lifted and the creditors are free to continue their collection actions.

Chapter 7 bankruptcy and creditor

All the creditors in bankruptcy under chapter 7 are also entitled to an equitable share in the non-exempt assets of the debtor. In cases where there is no non-exempt assets, unsecured debt is discharged but then also a secured creditor (that is the one who has a lien in the property of the debtor) has the assurance that his debt would be paid. Under this kind of situation, the creditor is allowed to file for a petition relieving him from the automatic stay and resume his collection process.

If the debtor has non-exempt assets, then the trustee distributes them amongst the unsecured creditors, which is based on priority list. The creditors have to fill out the claim form and submit it beforehand.

Chapter 11 bankruptcy and creditor

In chapter 11, the creditors in bankruptcy have more right and are more involved in the whole reorganization plan as well as the repayment plan. After filing for your proof of claim, you need to make sure if your debt is secured or unsecured. The trustee then appoints a committee of creditors which is in direct contact with the debtor. The main job of the creditor committee is to look into the debtor’s business and also help in formulating a repayment plan. The major objective of creating the committee is to make sure that the company is running smoothly during the proceedings.

Chapter 13 bankruptcy and creditor

In this kind of bankruptcy, the trustee organizes a meeting of the creditors. The repayment plan outlined by the debtor is outlined and the creditors have the right to object to it and give suggestions if they think it is not in their interest.

Creditors in bankruptcy do have certain rights which they should exercise. In order to receive your money, it is important to file your proof of claim as soon as you receive the notice from the court declaring the bankruptcy of your debtor. And if your name is not included in the list of creditors, then the stay is not applicable and you can continue with your collections.

After filing your proof of claim, the secured creditor has the assurance of receiving their money back. In chapter 7, the creditor is paid after selling of the non-exempt property of the debtor. In chapter 11, the creditor is very much involved in the formulation of the repayment plan and its smooth working. In chapter 13, the creditor gets his payment on a regular basis according to the repayment plan.