What Will My Creditors Do When I File Bankruptcy?

What Your Creditors Do When You File Bankruptcy

When a debtor files bankruptcy creditors are forced to immediately change their behavior.

Below are a few things that creditors will do once a debtor files bankruptcy:

  1. After a debtor files bankruptcy their creditors will stop all collections activity.  For example, if a creditor was calling and sending letters to a debtor, they will stop.  If they were in the process of suing a debtor, they will stop.  If they were garnishing a debtor’s wages, they will also stop this activity.
  2. Larger creditors will stop all contact with the debtor immediately after a debtor files bankruptcy.  However, some smaller creditors may not stop contact immediately because they are ignorant of the bankruptcy law.  There have even been some rare cases where a small “mom and pop” creditor becomes belligerent after a debtor files bankruptcy.  If this happens contact your bankruptcy attorney immediately.
  3. After the bankruptcy filing some creditors will do an analysis of the debt to try to figure out if it is even worth pursuing.  If it is a smaller creditor and they are unsecured they may decide to not pursue payment in the bankruptcy case because of the unlikelihood that they will be able to recoup their money.
  4. Most larger creditors will file a proof of claim in the bankruptcy case.  Once the creditor files a proof of claim in the bankruptcy case they will become part of the larger pool of claimants and may receive part or all of their money back.
  5. Some creditors may decide to attend the 341 meeting with the debtor, bankruptcy attorney and bankruptcy trustee.  However, it is rare that any creditors show up at the 341 meeting unless they have some type of dispute or the debtor’s bankruptcy case is particularly complex and involves lots of assets.