As a creditor, understanding the bankruptcy process is integral to minimizing potential losses and protecting your interests. Our firm provides experienced services for creditors in the bankruptcy context, ranging from obtaining relief from the automatic stay to filing proof of claim forms and, where appropriate, objecting to confirmation of bankruptcy plans. The firm also provides bankruptcy litigation services by defending suits brought by bankruptcy trustees to avoid mortgage liens or recover allegedly preferential payments made by debtors before a bankruptcy case was filed. The Academy Law Group can help you successfully navigate the bankruptcy process and maximize your return on your investment.
What is the “automatic stay?”
The automatic stay is a hugely significant part of the bankruptcy code. It automatically stays (i.e., stops) almost all collection and enforcement actions against the debtor, the debtor’s property, and property of the bankruptcy estate. The automatic stay goes into effect at the moment a bankruptcy petition is filed under Chapter 7, Chapter 9, Chapter 11, Chapter 12, or Chapter 13. With few exceptions, a creditor may not take any action against the debtor or his/her property unless the creditor receives permission from the bankruptcy court. Foreclosures, lawsuits, garnishments, replevin, repossession, judgment collections, and payment demands, all must be halted. Intentional violations of the automatic stay can result in substantial penalties, including punitive damages.
Did you know that the automatic stay can be extended to co-debtors?
Under Chapter 12 and Chapter 13 bankruptcy filings, the automatic stay prevents creditors from pursuing a co-debtor of the debtor for certain consumer debts.
Did you know that the rights of a creditor whose claim is secured only by the debtor’s principal residence cannot be modified in bankruptcy, except under very specific circumstances?
This unique protection of secured creditors’ rights in bankruptcy extends to secured claims like mortgages, homeowner’s association liens, and condominium assessments. However, it is possible for a debtor to “strip off” a junior lien on the debtor’s principal residence if the lien is “wholly unsecured.” A junior lien is wholly unsecured if the value of the debtor’s real property is less than the total amount of all senior secured claims. If this situation arises, the debtor may be able to avoid the junior lien and treat the debt as a standard, unsecured debt. “Lien stripping is only an option when the debtor has filed for Chapter 11 or Chapter 13 protection.
Were you aware that a bankruptcy trustee can demand that a creditor return any payments it received from a debtor within 90 days before a bankruptcy filing?
This is known as a “preferential transfer.” There are a number of defenses available to the creditor that may prevent it from having to turn over these “preference” payments to the trustee. Your bankruptcy attorney can identify any defenses you may have and help you pre-plan if you are accepting payments from a person or entity that may be insolvent or on the verge of filing for bankruptcy.
Did you know that a bankruptcy trustee is granted special powers to avoid (i.e., treat as nonexistent) fraudulent transfers?
A fraudulent transfer can be based on “actual fraud,” which is characterized by a party’s actual intent to hinder, delay, or defraud a creditor. More commonly, however, a fraudulent transfer is based on “constructive fraud,” which is generally characterized as a transaction where the transferor receives less than the reasonably equivalent value in exchange for the transaction.
Did you know that a landlord holding an unexpired lease, whether it is a commercial lease or a residential lease, is entitled to special treatment under the bankruptcy code?
The lessor, or the bankruptcy trustee, is given a specific amount of time in which he or she must either reject the lease, assume the lease and honor all obligations, or assume and assign the lease to someone else.