The average creditor stands to lose a significant amount of money when a debtor files for bankruptcy. This can be extremely frustrating for Georgia creditors who have made multiple attempts to collect debts that they are owed. If you recently learned that one of your debtors has filed for bankruptcy, you need to understand how best to assert your own rights throughout the process.
Watch out for the automatic stay
When someone files for bankruptcy, it triggers something called an automatic stay. An automatic stay stops all collection efforts that take place outside of bankruptcy court. A few examples of collection efforts that you will not be able to utilize if an automatic stay is in place include:
- Collection lawsuits
- Wage garnishment
- Foreclosure proceedings =
This does not mean that you will lose out on every opportunity to collect at least some of your debt. For example, it is possible to request a stay relief. This would lift the automatic stay and allow you to move forward with a specific collection action.
Filing proof of claim
Debt repayment differs depending on the type of bankruptcy someone files for. However, the most important thing you can do to make sure you receive some type of payment in a bankruptcy claim is to file a proof of claim. A proof of claim requires information such as account numbers and proof of debt, and often involves submitting a significant amount of documentation.
Falling on hard times can be difficult, and sometimes Georgia debtors turn to bankruptcy to find new financial footings. This should not come at the cost of creditors taking a hit for owed debts, though. If you need help pursuing debt collection efforts either before or during the bankruptcy process, do not hesitate to visit our website for further information.
