Just about all of the New York bankruptcy advice out there is designed to help debtors in their petitions, and it warns them of the pitfalls of trying to navigate the bankruptcy process without an experienced lawyer. One item that doesn’t appear often is the opposite: What happens if you’re dealing with a creditor that isn’t represented by counsel? The situation crops up sometimes, and while it doesn’t cause too many problems in most instances, there are some things that unrepresented creditors do that can add difficulties to a debtor’s bankruptcy.
Some examples come from the U.S. Bankruptcy Court for the Central District of California’s 2011 Annual Pro Se Report.
- Self-represented creditors sometimes misunderstand deadlines, particularly for objecting to the dischargeability of a debt, filing a proof of claim, or initiating an adversary proceeding.
- They also sometimes mistakenly believe their attendance at the meeting of the creditors is mandatory
- Judges in central California report seeing pro se creditors appearing regularly in adversary proceedings.
- Finally, the district’s meditation program helped with most problems associated with self-represented creditors.
Self-represented creditors who run afoul of the automatic stay can be the most difficult to deal with. Some creditors believe they can continue garnishing a debtor’s paycheck when they cannot. In rare circumstances, creditors who have a lawsuit pending against the debtor in a different court might not realize that the proceeding must be stayed. However, usually the debtor informs the court. A more common problem, which appeared earlier on this blog, is what happens when creditors receive money from a debtor to repay a debt that might be considered a preference by the trustee.
Many creditors, especially those in no-asset bankruptcy cases, don’t have a lot to worry about in a bankruptcy proceeding filed by someone who owes them money. For the most part they can understand their rights through self-help. However, there are times when creditors can benefit by hiring a bankruptcy lawyer, such as for handling an adversary proceeding, an accusation of violating the automatic stay, or a preference action filed by the trustee. In the end, though, it’s unlikely the creditor will lose more money without hiring a lawyer.
Debtors for their part, have a lot more at stake. A discharge order is worth as much as the petitioner’s debts plus future interest payments and peace of mind, so hiring an experienced bankruptcy lawyer can save a debtor thousands of dollars.
For answers to more questions about creditors in bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced bankruptcy trustee actions Bruce Weiner for a free initial consultation.
