Creditors Rights in a Chapter 13 Bankruptcy

Overview of creditors' rights in a Chapter 13 bankruptcy proceeding.

The U.S. Bankruptcy Code establishes the basic rights and obligations of debtors and creditors alike. Additionally, the local rules of each individual bankruptcy court in the United States establishes other procedural rights that attach to a creditor in a particular bankruptcy proceeding.

Function

The underlying function of all creditors' rights in a Chapter 13 bankruptcy is to ensure the protection of legitimate financial interests. Protecting these interests requires permitting creditors the ability to participate in all aspects of the bankruptcy proceedings.

Time Frame

The rights of creditors in a Chapter 13 bankruptcy vest the moment the case is filed. These rights carry forth through the development of the repayment plan and the final discharge of the case.

Claim

At the commencement of a Chapter 13 bankruptcy case, a creditor possesses the right to make a claim for money due owing. This is accomplished by submitting what is called a proof of claim form, pursuant to the U.S. Bankruptcy Code. The bankruptcy court clerk sends to all creditors this standard form immediately after a debtor files a Chapter 13 bankruptcy petition.

Creditors' Meeting

Each individual creditor is guaranteed a place at the table at the creditors' meeting conducted in the case. A creditors' meeting typically is held within 60 days after the filing of the petition by the debtor. The creditor's meeting provides a creditor the ability to question a debtor directly about his assets, debts, income and expenses.

Plan Development

The heart of a Chapter 13 bankruptcy case is the development of a plan through which the debtor satisfies obligations owed to most if not all creditors. A creditor has the right to provide input in regard to the development of this repayment plan.

Legal Representation

Not only is the debtor in a Chapter 13 guaranteed the right to legal counsel if she so desires, but a creditor possesses the same right. A creditor is entitled to retain an attorney to pursue its interests throughout the course of the Chapter 13 proceedings.

References

• U.S. Bankruptcy Code
• Cornell University Law School: Bankruptcy Overview
• "The Glannon Guide to Bankruptcy"; Nathalie Martin; 2006
• U.S. Bankruptcy Courts: Local Rules

Resources

• American Bar Association: Bankruptcy & Insolvency Litigation Committee