Creditor Rights: Bankruptcy: Debts to clients

Creditors often become frustrated and confused when their debtors file for bankruptcy, especially when the bankruptcy estate demands repayment of amounts received by creditors without allowing the creditors to continue collection activities against, or obtain substantial repayments from, their debtors. Fox, O'Neill & Shannon, S.C.'s creditor's rights attorneys have extensive experience representing creditor clients in bankruptcies throughout the United States.

When appropriate, FOS's attorneys will move the bankruptcy court to lift the automatic stay against creditor collection activities, which automatically occurs when a bankruptcy petition is filed. The attorneys will similarly move to protect a secured creditor client's right to collateral. A lessee's rights to leased premises subject to the bankruptcy will also be protected.

FOS's creditor's rights attorneys will also work with the client to complete and file appropriate proofs of claim on behalf of the creditor client, review and make recommendations regarding proposed asset plans, and otherwise guide the client through the bankruptcy proceedings.

Not all debts are discharged in bankruptcy. For example, child support obligations and certain fraudulent obligations are not dischargeable. However, affirmative action is required to have the court determine that a debt is nondischargeable, and so authorize the creditor to continue collection activities notwithstanding the bankruptcy. Where a bankrupt's debt to a client appears to be nondischargeable, the firm's creditor's rights attorneys will work with the client to evaluate the obligation, the law, and the feasibility of moving for a finding of nondischargability, and, if appropriate, will move the bankruptcy court to such a determination.