Creditors can take a number of measures to collect on a debt. If you fall behind on your payments, the Hollywood bankruptcy attorneys at Anidjar & Levine can help you. Our attorneys provide experienced counseling and representation in Florida bankruptcy matters. We can discuss what rights your creditors have to collect on any of your outstanding debt, and what you can do to stop or minimize the debt’s impact on your financial well-being.How Creditors Can Collect on a Florida Debt
Creditors have the right to collect the money they are owed. If you miss payments on a debt, a creditor can take various steps to try to collect on it. This means that a creditor can contact you repeatedly for payment. Creditors can call you, mail you letters, or even contact your family members or employers. Generally, as long as the creditors’ activity does not rise to the level of harassment, they can continue to contact you for payment.
A creditor also can file a lawsuit against you. A creditor can sue you for any outstanding amount you owe. If the creditor succeeds in court, it may obtain an order to garnish wages.
If you fall behind on debt secured by collateral, moreover, the creditor can take possession of your property and try to sell it as a means of payment. A common example of a seizure and property sale is the foreclosure of a home or the repossession of vehicle.
If you file for bankruptcy, however, you may be able to stop most creditors’ attempts to collect on their debts. Each of your creditors in bankruptcy will be prioritized and paid based on their priority and available funds.
When you file for Chapter 7 or Chapter 13 bankruptcy, you place an automatic stay on most efforts to collect on your outstanding debt. With the exception of family support obligations, tax liens, and other specific debts, you can halt collection activity until your assets are liquidated in Chapter 7 or until your repayment plan is approved in Chapter 13.
Whether (and how much) a creditor gets paid through your bankruptcy proceeding depends on the creditor’s priority vis-à-vis other creditors. There are three types of claims: priority, secured, and unsecured claims.
Creditors with priority claims are the first to get paid. These include payments for alimony and child support, as well as costs related to the bankruptcy itself.
Creditors with secured claims get paid next. These are creditors with a secured interest in your property. Mortgages are an example of a secured debt because the mortgage lender can foreclose on the property. With Chapter 13 bankruptcy, however, you may be able to keep your property and work out payments through a repayment plan that is based on your disposable income. If there are multiple mortgages on your home, a court may order a creditor to remove its lien in a process called lien stripping.
Creditors with unsecured claims have the lowest priority. These are creditors with no collateral or security interest in property. The most common example is credit card debt.
If you complete the bankruptcy process, any remaining debt will be discharged after your Chapter 7 liquidation or completion of your Chapter 13 repayment plan, with the exception of non-dischargeable debt. If you do not complete the process successfully, your creditors have the right to resume their collection attempts on any remaining debt. A Florida lawyer can help you through the bankruptcy process if it is a viable option for you.Bankruptcy Attorneys Offering Assistance to Fort Lauderdale Residents
At Anidjar & Levine, we offer knowledgeable guidance and representation in the area of bankruptcy law. Our Fort Lauderdale bankruptcy lawyers can discuss what rights your creditors may have, and how you can manage your debt through bankruptcy or another alternative. If you decide to move forward with Chapter 7 or Chapter 13 bankruptcy, we can represent and guide you through every step of the process. We serve clients throughout Miami-Dade County and West Palm Beach. Call us today at (800) 747-FREE or complete our Contact Us form to schedule a no-obligation, confidential consultation.