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FAQs for Creditors
What happens if the presumption of abuse arises?
If the presumption of abuse arises, creditors may have the right to file a motion to dismiss the case under § 707(b) of the Bankruptcy Code. The debtor may rebut the presumption by showing special circumstances.
What is exempt property?
The debtor is permitted by law to keep certain property as exempt. Exempt property will not be sold and distributed to creditors. The debtor must file a list of all property claimed as exempt. You may inspect that list at the bankruptcy Clerk's office. If you believe that an exemption claimed by the debtor is not authorized by law, you may file an objection to that exemption. The bankruptcy Clerk's office must receive the objections by the "Deadline to Object to Exemptions" listed on the 341 notice you received.
I am a creditor in a chapter 7 asset case. How long before I can expect a dividend payment?
There is no simple answer to that question. The length of time before a dividend is received depends on the circumstances of the individual case because assets must be liquidated and claims evaluated prior to distribution. Creditors should contact the chapter 7 trustee and inquire when he or she expects to issue checks to creditors. The chapter 7 trustee's name and telephone number are on the notice of the section 341 meeting of creditors.
My ex-spouse has filed bankrutpcy. They have listed me as a co-signer on a scheduled debt. What can I do? Does my divorce decree protect me?
If liable with a former spouse/debtor on a debt, the non-debtor former spouse should seek competent legal advice for a thorough explanation of his or her rights and obligations in this area as soon as he or she learns that the ex-spouse has filed a bankruptcy petition.
I am a child support creditor. How can I determine whether my child support debt is non
Child support debts are excepted from discharge. If the nondischargeability of the debt is disputed by the debtor, the child support creditor may file an adversary proceeding to have the Bankruptcy Court determine whether the debt is, in fact, nondischargeable.
What is an adversary proceeding and when is it required?
An adversary proceeding is a civil action within the bankruptcy case where a plaintiff sues one or more defendants. An adversary proceeding, as opposed to a motion, is required when a party seeks certain types of relief, such as a restraining order and injunction, denial of or exception to discharge, or for turnover of property. An adversary proceeding requires a filing fee. Click here for fees. The court will issue a summons which the plaintiff must serve on the defendant, who must respond to the complaint. The parties will conduct discovery, and the court will determine how to dispose of the complaint, either by summary disposition or after a trial.
What is a Discharge of Debts?
The debtor is seeking a discharge of most debts, which may include your debt. A discharge means that you may never try to collect the debt from the debtor. If you believe that the debtor is not entitled to receive a discharge under Bankruptcy Code §727(a) or that a debt owed to you is not dischargeable under Bankruptcy Code §523(a)(2), (4), or (6), you must start a lawsuit by filing a complaint in the bankruptcy Clerk's office by the "Deadline to File a Complaint Objecting to Discharge of the Debtor or to Determine Dischargeability of Certain Debts" listed on the 341 notice that you received. The bankruptcy clerk's office must receive the complaint and any required filing fee by that deadline.
How do I file for relief from the automatic stay?
Once a debtor files bankruptcy, creditors generally can't continue proceedings against them, see 11 U.S.C. § 362(a). There are certain exceptions to this rule, however. In order for a party to continue a legal proceeding against the debtor that has been stayed because of the filing of bankruptcy, the party must first obtain an order from the Bankruptcy Court granting relief from the automatic stay.
In order to obtain relief from the automatic stay to continue collection action against the debtor, the party must file a Motion for Relief from Stay with the Bankruptcy Court along with the applicable filing fee. Click here for current fee. This fee is not required if the moving party is a creditor seeking to collect child support, and the moving party has also filed Official Form B-281. The motion must be served on the debtor, debtor(s) attorney, case trustee and other creditors and parties in interest. The legal authority for obtaining relief from stay can be found in §362 of the Bankruptcy Code [11 U.S.C. § 362(d)].
What actions are creditors generally prohibited from taking?
Prohibited collection actions are listed in Bankruptcy Code §362. Common examples of prohibited actions include contacting the debtor by telephone, mail or otherwise to demand repayment; taking actions to collect money or obtain property from the debtor; repossessing the debtor's property; starting or continuing lawsuits or foreclosures; and garnishing or deducting from the debtor's wages. Under certain circumstances, the stay may be limited to 30 days or not exist at all, although the debtor can request the court to extend or impose a stay.
What is a 341 meeting or meeting of creditors?
The “341(a) meeting” is sometimes called the “meeting of creditors” and gets its name from the Section of Title 11 of the United States Code where the requirements for the first meeting of creditors and equity security holders are found. It is also referred to as the “First Meeting of Creditors” or just “First Meeting”. The debtor (both spouses in a joint case) must be present at the meeting to be questioned under oath by the trustee and by creditors. Creditors are welcome to attend, but are not required to do so. The meeting may be continued and concluded at a later date without further notice.