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The rights of your creditors in a bankruptcy case

Debtors have rights, and creditors do too. It's the responsibility of the bankruptcy trustee to administer your bankruptcy in a way that ensures that your creditors get paid back as much money as possible for their legitimate claims. This must be achieved before your remaining debts get discharged.

During your bankruptcy proceedings, all creditors that comes forward have the right to have their claims heard. Each creditor will be given the chance to argue why it should receive part of the liquidated proceeds from a Chapter 7 bankruptcy or part of the structured payments from a Chapter 13 bankruptcy. Furthermore, creditors have the ability to argue against a debtor's right to receive a discharge.

Interestingly, some creditors have more rights than others. For example, individuals who are owed child support and creditors owed secured debt will have first priority in the bankruptcy. Secured debt includes debt that is secured by collateral, in which a creditor may repossess a property in case of default.

As for creditors with unsecured claims, they have less priority in a bankruptcy and they have no right to collect collateral in the event of a loan default. Unsecured debt includes credit card debt and medical debt, which receives the lowest priority in a bankruptcy. Because of their status as a second-priority creditors, it's not uncommon for unsecured debt holders to receive nothing during your bankruptcy process.

Do you want to file for bankruptcy and get your finances under control? A King County bankruptcy lawyer can assist you in determining if the bankruptcy process is right for you. At Law Office of Ruth Nelson, our bankruptcy team is available to speak with you about your debt situation.

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Law Office of Ruth Nelson
7742 14th Avenue NW
Seattle, WA 98117
Phone: 206-633-2517
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