Your Rights Under Bankruptcy Laws
While some may assume bankruptcy laws lean more toward helping debtors than creditors or vice versa, the fact is they are designed to protect both debtors and creditors. Rules and regulations in relation to bankruptcy laws, along with the rights of both groups, are enforced by the bankruptcy court to ensure fairness of the case being presented before the judge. As a debtor, you'll want to understand what your rights are and how they play a role in your bankruptcy case.
A few of those rights are as follows:
- Creditors must cease all collection action against you when your bankruptcy petition is filed with the court, also known as the automatic stay.
- As a debtor, you have the right to a fair hearing. This means the court and its officials should treat you with respect and dignity while allowing you to present information pertaining to the bankruptcy process.
- You have the right to retain assets as stated in the Bankruptcy Act. While Chapter 7 bankruptcy does allow qualifying assets to be used to pay toward creditors, the Bankruptcy Act does consider certain assets to be exempt.
- You have the right to claim necessary living expenses. These expenses are often reasonable and with the repayment plan for Chapter 13 bankruptcy , debtors commit to pay what they can afford (disposable income) after living expenses are paid.
- When requirements are met for the chapter that is filed, you have the right to have debts discharged (unsecured debts).
- You have the right to obtain a fresh start. At this point, you should see an improvement financially that lets you manage secured debt or debt ineligible for discharge more responsibly. It's the fresh start you deserve to help maintain your financial future.
The above gives an idea of debtor rights and if they are violated by another party such as a person or organization, they could face punishment from the court. Review questions or concerns with a reputable bankruptcy attorney.