Bankruptcy laws are double edged – they are designed to protect creditors and debtors. Some experts claim that these laws lean to heavily towards debtors while others claim those same laws lean to much towards creditors. Either way, both groups have rights under bankruptcy laws, and those rights are strictly enforced by the bankruptcy court.
For debtors, those rights are fairly clear. Here is a brief list of some of the rights that debtors enjoy:
- Cessation of creditor action – Once you have filed your petition for bankruptcy, your creditors must cease all action against you. This includes contacting you except through the court nominated bankruptcy trustee.
- Right to a fair hearing – As a debtor, you have the right to be heard and treated fairly and with dignity by the court, its’ officials and the bankruptcy process.
- Right to retain assets as prescribed by the Bankruptcy Act – The Bankruptcy Act, both state and federal lists the assets, or the value of assets that debtors can keep. In a Chapter 7 petition, any assets over and above those deemed exempt can be ceased and sold to help pay your debts.
- Right to claim reasonable living expenses – Under a Chapter 13 bankruptcy petition, debtors agree to enter into a payment plan. This plan takes into account all reasonable living expenses and only commits a debtor to pay any excess income to the trustee.
- The right to have debts discharged – Once the requirements have been met for a particular bankruptcy chapter, the debtor is entitled to have the remaining unsecured debts fully discharged.
- Right to a fresh start – The most important component of any bankruptcy petition is the right to a fresh start. Your only debts are those not eligible for discharge, and any secured debts. You should be in a better position financially and better able to maintain those debts following your bankruptcy discharge.
You are entitled to those rights, and should any person or organization impinge on your rights, they will suffer the fate of the courts. Of course, creditors have rights as well, and as a debtor seeking bankruptcy help, you have obligations. If you fulfill your obligations, bankruptcy law insists that all other parties reciprocate.