Protecting Secured Creditor’s Rights In Bankruptcy

There are several protections under Bankruptcy Code for individuals or groups that have supplied services or goods to a debtor on credit before a debtor's bankruptcy filing date. When done properly, a trade creditor can increase the chances of receiving a distribution from the bankruptcy estate by invoking these protections. If the trade creditor does not take action, the debt might be defined as an unsecured claim. There are several different ways in which a creditor can be protected during a bankruptcy case.

What is a Request for Administrative Expense?

The first protection is offered under Section 503(b)(9) and it is known as a Request for Administrative Expense. If you have sold goods to a debtor within the 20 day period before the bankruptcy case is filed, you can apply for your claims to be considered an administrative expense priority. This is only eligible for goods and not services.

What is a Reclamation Demand?

You may also consider the potential for a Section 546(c) Reclamation Demand. This section is broader than the first example since it is expanded the goods sold in the 45 day period prior to the filing of the petition. In this scenario, however, the rights of sellers to reclaim goods are often subject to prior interests of secured parties. A reclaiming seller will have to file on time for the reclamation demand but he or she might also need to file an adversary proceeding to prevent the debtor from using the purchased goods or from commingling the goods with other supplies.

What is Post-Petition Assertion of Mechanics' Lines?

Finally, another option for a secured creditor is the Post-Petition Assertion of Mechanics' Lines. States have all adopted laws regarding the protection of creditors whose labor, services, equipment or materials were used to improve the land of the debtor.

Even when a secured creditor takes all these steps, it is important that no other action is taking during the bankruptcy case to impair these rights. For example, a debtor might take action to sell property free and clear of liens, and this sale would include mechanic's liens.

From the perspective of secured creditors, there have been actions taken to protect their interests when a debtor files for bankruptcy. When used properly by an experienced attorney, the provisions listed above can be extremely helpful in moving a case forward and having the interests and rights of the creditor at the forefront of a bankruptcy case. A creditor must take action by speaking with a qualified attorney from the outset.

Difference between IVA & DMP

If you are like many people in the UK, then chances are that you have been having some financial problems recently. For some people, financial problems might mean that you have to curb your lifestyle. In other words, you will want to make sure that you are not going out to eat as much or buying fancy coffee beverages every morning. For other people, however, financial problems can actually lead to a serious rethinking. If you have creditors who have been hounding you for money, you need to make sure that you are not ignoring your problems. This is the worst thing you can do. In this article, you will learn about getting the best kind of bankruptcy advice.

The first thing you should know about most bankruptcy advice is that you are going to be confronted with two main choices. You can choose an IVA or a DMP. First, an IVA stands for an Individual Voluntary Arrangement. This is an agreement that you will reach with your creditors. You will agree to a reduced sum to pay and you will also debate various time frames for paying the money back. This is a formal, legal process, which means that you will need to work with a professional who understands the IVA and will be able to help you through the sometimes difficult process of sorting out your finances and reach a logical conclusion.

The second tenet of most bankruptcy advice is the DMP. This stands for Debt Management Plan. This is the option chosen by those who owe more money than they can realistically pay. In other words, the money they owe would be most of their income or it might even exceed the sum total of their income. With a DMP, you will hire a third party to look at the facts. The third party will look at the money you owe and the money you make. Various concerns will be taken into consideration, such as lifestyle and necessary payments for your living space and transportation.

When it comes to which is the best bankruptcy advice, this really depends on your personal financial situation. For many people, the answer is not always clear. This is why it's a great idea to sit down with a financial specialist who will be able to help you make a decision that makes the most sense for where you are in your life.

A Way to Choose a Bankruptcy Lawyer

You might be unable to meet your obligations

There comes a time when you have got to call within the services of a bankruptcy lawyer or attorney. You'll have tried everything within the book including payment arrangements and debt relief. You may have had numerous telephone calls along with your bank manager and you would have negotiated with all types of economic advisers. But the end, when it comes, is brutal in its honesty. You'll understand that you've got no alternative however to file a bankruptcy.

For some individuals this is often the ultimate symbol of monetary failure. You will feel that you've got disenchanted your friends and family. You'll also feel that you have got ruined your life. I personally wouldn't advise people to fret too much regarding a bankruptcy. What's done is done. You only have to seem ahead and attempt to resolve you problems.

Getting through the process

The bulk of mistakes that you will build throughout the first phases of your bankruptcy can be primarily thanks to a scarcity of knowledge. That is when you will need the services of the bankruptcy lawyer or attorney who can be able to grant you accurate data about the bankruptcy process and the way it affects you. Not everything that you just hear on television or from friends can build sense when viewed in lightweight of your specific circumstances. That is why you need somebody neutral to appear once you and facilitate your overcome the panic that is inevitable.

If I was during a state of affairs whereby I had no different but to travel bankrupt, I might be wanting to spot the causes of my problems. Once I know the causes, then I will begin to think about the solutions. Sometimes it is something that is beyond your management as what typically happens in the United States of America. In those instances it could be that someone is going bankrupt because they need fallen ill. The selection is between life and financial stability. The bankruptcy lawyer or attorney might still be in a position to assist you here by pointing you to the simplest places to urge relief or different help from the government.

When you select to go bankrupt you may be needed to look before a decide who can hear your case and decide whether or not you should be under the bankruptcy scheme. Some folks are rejected outright for whatever reason but you will be among those that are accepted. You would like to follow the rules rigorously so that you do not foul once more at the last hurdle. If you feel that you are unable to follow the principles that are imposed on you, then you would like to inform your bankruptcy lawyer or attorney. They can decide what the following step is.

Don’t Fear Bankruptcy When Buried in Credit Card Debt

A Typical Credit Card Debt Scenario

"I feel like I am paying too much towards my credit cards. A few months back I moved from my apartment into a new place. During the move, I was very disorganized and misplaced my bills. I didn't think it was going to be the end of the world missing one month's payment on my credit cards and thought I would just make it up the next month. I was shocked when I received my next month's bills - all 4 of my credit cards raised their interest rate on me to 29.9%! I only missed one month! I called all of them was told there was nothing I could do. I owe about $16,000 in credit card debt, and this new interest rate is killing me. To keep up with my payments on my credit cards, I had to miss a couple payments on my car. Now I am getting phone calls demanding payment. I am afraid I am falling down a hole that I may not be able to pull myself out of. A friend of mine mentioned to me the possibility of bankruptcy, but I do not want to damage my credit. What can I do, if anything, to get me out of this mess?"

Bankruptcy: Nothing to Fear

Many people fear the thought of bankruptcy not only because of the social stigma but the presumption their credit will be destroyed. If you have fallen behind in your credit card payments, missed your car payments, and/or stopped paying your rent or mortgage, your credit is already damaged! Nobody wants to file bankruptcy, however, bankruptcy should not be looked at as a financial scheme that damages your credit, but as a process that reestablishes your credit and offers a lifeline to those that have fallen into debt quicksand.

Bankruptcy and "Unsecured Debt"

Bankruptcy creates a way to eliminate credit card debt. Most credit card balances are considered "unsecured debt". That means that the credit card company has no hold on anything that belongs to you if you do not pay back your debt. "Unsecured debt" is specifically the kind of debt that bankruptcy is designed to remove. Apart from credit card debt, you may have other unsecured debts, and filing for bankruptcy can eradicate these as well. However, bankruptcy will not fully discharge your obligations to certain types of debts, including child support, alimony, tax debts, student loans, and any secured debts.

Bankruptcy can stop Creditor Harassment

If you are a victim of creditor harassment, immediately after filing for bankruptcy, the court system will send out notification to your creditors. And from this point on, creditors are considered to be under a "restraining order" and are not allowed to contact you to request payment. Depending on the type of bankruptcy, a 341 Meeting of Creditors will be scheduled and deadlines will be set for creditors to file a claim and attend the 341 Meeting of Creditors. Of course, all of the proceedings from here are dependent on the type of bankruptcy filed, so it is important to talk with a bankruptcy attorney who can more directly answer these questions.

When to Take the Gloves Off?

If you feel you are only barely able to scrape up the money to make your monthly payments, or feel you are drowning each month in debt, it may be time to hang up the gloves and consider filing bankruptcy. The government gives us the opportunity to have a "fresh start." The most important thing is not to panic, take a deep breath, and evaluate your financial situation with someone who can help.