What is the Role of a Creditor’s Lawyer in a Bankruptcy Case?
Once a debtor files for bankruptcy, especially under Chapter 7, most creditors write off their losses. But the experienced small-business team at Brown Dunning Walker Fein Drusch PC understands that not every lender can absorb a full discharge. This is where our experienced Colorado bankruptcy creditors’ rights attorneys step in.
Ensuring Creditor Priority and Maximizing Liquidation Payouts in Colorado
When debtors file for bankruptcy, they generally have multiple secured and unsecured debts. Determining which debts are paid first, if at all, is governed by federal bankruptcy law. You must assert your claims immediately and represent your interests during the creditor’s meeting to retain your right to claim a fair portion of the estate or monthly payouts. Debts are generally paid in the following priority order:
- Mortgage (secured)
- Vehicle loans (secured)
- Judgment lienholders (remaining balance of secured debts)
- Alimony and child support
- Unpaid employee wages and benefits
- Taxes
Under the absolute priority rule, unsecured creditors, credit cards, personal loans, medical bills, utility arrears, and past-due rent do not receive any distribution until secured creditors are paid in full. This often results in little to no payout for unsecured creditors, which is why you need legal counsel to immediately represent any priority interest during the creditor’s meeting or allege you hold a non-dischargeable debt.
Challenging Bankruptcy Petitions and Tracing Fraudulent Transactions
If you’re not due for a fair payout, a creditor’s lawyer might challenge the bankruptcy petition on procedural grounds. This includes alleging that Chapter 7 debtors fail the means test and must instead make Chapter 13 payments. It could also include defenses related to the debtor’s compliance failures or bad-faith transfer of assets. Many debtors illegally transfer or convert assets before filing for bankruptcy. Experienced creditors’ rights lawyers can review every suspicious transaction and even demand a return of unlawfully transferred funds.
Filing Adversary Proceedings and Objecting to Discharge
Debtors often elect bankruptcy because of the automatic stay, which halts all civil litigation and prevents most creditors from filing lawsuits while the debtor remains in bankruptcy. However, creditors have the right to file an adversary proceeding within the bankruptcy case. Adversary proceedings are similar to civil lawsuits and require the creditor to file and serve a legal complaint. Most adversary proceedings allege that a particular debt is not dischargeable or that the debtor is not entitled to any discharge. Creditor’s lawyers can file adversarial claims to assert your rights even if you’re otherwise blocked from filing litigation.
Bankruptcy Creditors’ Rights Attorneys Serving Colorado
Once a debtor files for bankruptcy, it triggers a unique and complex set of federal substantive and procedural laws. Retaining an experienced bankruptcy creditors’ rights lawyer from Brown Dunning Walker Fein Drusch PC is the best way to prevent discharge and maximize recovery. Strict deadlines apply to bankruptcy creditors in Colorado. Call (303) 239-3363 or connect with our Denver legal team online today to protect your financial interests.