The Bankruptcy Notice to Creditors: What Will they Do?

A notice to creditors is provided to the companies and individuals you list in your personal bankruptcy as creditors. It basically puts the creditors on notice that you have filed for personal bankruptcy. When you file bankruptcy you are initiating a legal process to either repay the creditors you owe in a specific timeframe or eliminate the debts all together. However, the creditors do have options once they receive a notice to the creditors.

Creditors Must Stop All Collection Activities

The notice to creditors let’s all the companies and individuals know that they must cease all debt collection activities. These activities typically include garnishments, foreclosures and lawsuits. In other words, they must stop trying to collect the back payments you owe. Creditors can’t even call you to discuss the bankruptcy or paying the debts. Creditors can’t start or continue any debt collection activities because of the automatic stay you receive when you file personal bankruptcy. It’s the automatic stay which stops creditors. However, the notice to creditors lets them know that you’ve filed bankruptcy.

Give Creditors Options

The notice of creditors also informs the creditors of information about filing a proof of claim and the deadline they have. The proof of claim is generally used to certify that the creditors are actually owed the money. Creditors must attach all copies of judgments, contacts and agreements to the proof of claim.

Provide Creditors the Opportunity to Attend the a Meeting

The Meeting of the Creditors, officially called the 341 meeting, is a fact gathering meeting. You, your lawyer, a bankruptcy trustee and creditors meet in an office to discuss your bankruptcy case. The bankruptcy trustee conducts the meeting. Although, creditors don’t have to appear, they can. Also, they can contest the bankruptcy.  

Lift the Automatic Stay

If you are in chapter 13 and fail to pay your monthly bankruptcy and/ mortgage payments, creditors can petition the court to have the automatic stay lifted. This means that—if granted—they can start debt collection activities because you failed to meet the bankruptcy requirements.  

Whether you have creditors contesting your bankruptcy or want to file bankruptcy, you should contact a bankruptcy lawyer. The lawyer can also help people who want to file a proof of claim to make sure they are paid.