Different types of debt will be treated differently during your Chapter 7 bankruptcy process. For example, secured debt will receive priority treatment compared to unsecured debt. Secured debt would be, for example, a home mortgage, which is secured by the home itself. If you default on your mortgage payments, the bank can take your home and it won't lose all of its investment. Unsecured debt would be, for example, credit cards.
Creditors' rights largely relate to each creditor's right to receive payment after a borrower has filed for bankruptcy. Creditors' rights can also refer to the ability to place a lien of a person's property, for example, in the case of default on a secured debt loan having to do with a mortgage. Creditors also have the right to seek the garnishment of a borrower's wages.
However, when a borrower files for bankruptcy, it would limit the creditor's rights because of an automatic stay associated with bankruptcy that protects the borrower from continued harassment to pay back debt. Filing for bankruptcy also puts the wage garnishment to a stop. In fact it would prevent creditors covered under the bankruptcy from taking any proactive steps directly against the claimant. Creditors would be forced to apply for payment through bankruptcy court at this stage.
If you have questions about the rights of creditors to collect debt from you. Or, if you have questions about your rights as a borrower, the Law Office of Ruth Nelson is available to answer any questions you might have. We can also help you determine if you're a suitable candidate for Chapter 7 bankruptcy.