The last resort when a person or organization cannot survive and pay its dues or curry out its operations is declaring itself bankrupt. It is why most organizations avoid going all in or taking big risks as this could be the end of their careers. When a bankruptcy petition is filed, some protocols automatically get into the act. When a bankruptcy petition is filed,
All Collection Activities Stop Automatically
If you are not aware of the term, an automatic stop is put into practice as soon as your bankruptcy petition is filed. It disables the creditors from any further collection of funds from the debtor or the bankrupt one. The court has strict rules against anyone who tries to. It means you won’t receive any lawsuits, fund demand threats, or in any other way, try to force you to return the debt. However, in specific cases, creditors, especially banks, or enterprises may approach the court for removal of the automatic stay. It may be on various grounds, and such requests are called motions in technical language.
Creditors and Debts
Each time a bankruptcy petition is filed, if some assets could be distributed, a bankruptcy notice is passed out to all the creditors, which have to be addressed at the earliest, usually seven days. The creditor has to provide proof of his claim about the type of debt, and the amount of it. Without this, the creditor’s credits cannot be issued at the time of the debt review. The debts may be of various things from bank loans to house, medical bills, and much more.
After this, the creditor’s debtors have to attend a meeting where the attorney’s expenses are discussed, and creditors are given time to review their petitions. However, there is usually no much use of these meetings unless the creditor believes that the in-debt party is hiding some assets or funds. It all occurs after a petition of bankruptcy is filed.
This article was written by Alla Tenina. Alla is one of the best tax attorneys in Los Angeles California, and the founder of Tenina law. She has experience in bankruptcies, real estate planning, and complex tax matters. Click Here for more information. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; the ABA and its members do not recommend or endorse the contents of the third-party sites.