Many Texas creditors believe that once a debtor files for bankruptcy protection, there is no chance of collecting any of the debt so there is little point in monitoring the bankruptcy process.
While certainly a bankruptcy filing can make collection of a debt more challenging, and many bankruptcies do end in full discharge of debtors without any payments to creditors, there are many creditors in certain situations that want debtors to file for bankruptcy so that there is a court process overseeing the payment of creditors. Furthermore, often reorganization of a debtors finances and operations with counsel may make it more likely that a debtor's business will survive. Also, if the creditor is secured, or a landlord, there are additional remedies in bankruptcy that may be available to provide hope of recovery.
Generally, a debtor files under a particular chapter of the bankrutpcy code, such as Chapter 7 (individual liquidation), Chapter 11 (business reorganization), or Chapter 13 (individual reorganization). Each type of bankruptcy has its own rules and corresponding effect on the creditor, so it is important that the creditor discuss these options with an attorney familiar with creditors rights in bankruptcy.
Lippincott Phelan Veidt does not represent debtors in filing for bankruptcy, so individuals needing to file bankruptcy should seek representation from attorneys that practice debtor bankruptcy.
If you have a legal issue related to a creditor issue in Bankruptcy, please contact Marc Lippincott for an appointment to discuss.