What are my rights as a creditor against a debtor who is filing for Chapter 7?

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What are my rights as a creditor against a debtor who is filing for Chapter 7?

I had a tenant who was evicted a judgement was awarded in my favor for about $3000. I waited about 2 years to take him to court to begin getting my money from him. The judge made a ruling that he was to pay me $80 a month until the full amount was paid. He made these payments in 2009. In 2010 he made only a few payments, then stopped. I found out that the business closed down. Approximately, 2 weeks ago he filed for Chapter 7 bankruptcy. What rights do I have as a creditor?

Asked on January 10, 2011 under Bankruptcy Law, Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

If the business is the debtor and it was an LLC or a corporation, then while you have the right to file you claim with bankruptcy court so you will get the appropriate distribution (if any) from the assets of the bankrutcy estate, it may be that *all* you can do is put in a claim and hope to get whatever--often dimes or even pennies on the dollar--comes to you. If the business is a debtor but is a sole proprietorship, or even if it's a LLC or corporation, but your debt was personally secured by an owner or other person, you may be able to proceed against the owner directly, even if there is a business filing; it depends on the circumstances. If any property or assets secured  the debt, you would have recourse to that property or asset--you can at least get it, even if you can't get anything else.

Depending on how much is still owed, it may not be worthwhile expending much effort or money on this.


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