Bankruptcy is a legal process that allows an individual or a business to repay some or all of the debt they have or to eliminate it altogether. It must be understood that there are serious consequences to the declaration of bankruptcy, one of which is losing a great deal of your property which must be sold, the proceeds of which are used to pay your debts.
When you file for bankruptcy, your Las Vegas Nevada bankruptcy lawyer will determine which of your debts are unsecured and those that are secured. An unsecured debt is one where there is no collateral given, a good example of this is credit card debt. Secured debt, on the other hand, is backed up by collateral. A car loan is a good example; the car is pledged to the creditor, the car in effect is the guarantee that the loan will be paid. A secured creditor will be paid before an unsecured creditor.
General rights of a creditor
Both parties in a bankruptcy action are advised to have a Las Vegas Nevada bankruptcy lawyer as the laws of bankruptcy are complex and usually well above the level of understanding of a layperson.
Although every creditor in a bankruptcy case has some rights, a creditor with a secured claim has more rights than a creditor that holds an unsecured debt. Creditors, both secured and unsecured are entitled to participate in any payment from the liquidated estate. All creditors can demand to be heard by the court and challenge the rights of a debtor to have a particular debt discharged.
Specific rights of a secured creditor:
Secured creditors are far better off than an unsecured creditor in the event of a bankruptcy. The pledged security is a lien which gives the secured creditor specific rights to the asset that was used as collateral against the debt. The secured creditor will hold a deed on a property, a security agreement on an asset such as a vehicle or will be protected by a judgment lien. These rights are denied an unsecured creditor.
There are a number of Chapters that can be used when declaring bankruptcy; a common one is Chapter 7. When a debtor files Chapter 7, he or she has three choices when dealing with a secured creditor. The debtor can surrender the secured property, reaffirm the debt or redeem it.
As a creditor in a bankruptcy action, you have specific rights. To ensure your rights, you are well advised to contact the Law Office of Hayes & Welsh, a Las Vegas Nevada bankruptcy lawyer dedicated to protecting the rights of creditors.
