NJ. Lawyer Explains What Action Credit Card Creditors Take In A New Jersey Bankruptcy Case.
This blog is limited to banks and other creditors that collect debt on behalf of credit card debt. The term “creditor” as used in this blog refers to such creditors, only. The creditor’s participation in a New Jersey chapter 7 bankruptcy case is different from a chapter 13 case. In a chapter 7 case, upon the filing, the court sends all creditors a notice of general information related to the bankruptcy filing.
Typically, the creditor takes no action, whatsoever, in connection with a chapter 7 case, with no distribution of assets or money, Generally, the creditor will appear at any hearing and will not file any documents with the court. However, if the creditor believes that the debtor incurred certain debt with no intention or ability to pay, at the time of the charge, the creditor may pursue a Complaint for the Non Discharge-ability of the debt. Allegations of fraud are atypical.
The creditors involving a New Jersey chapter 7 case, with an asset distribution, is handled differently. In this scenario, the trustee notifies each creditor that they may be entitled to funds from the debtors’ assets. Thereafter, the creditors file a Proof of Claim, with the court reflecting various information related to the debt. The proof of claim includes the classification of the debt, the amount due, etc. After the trustee receives the asset, he makes the appropriate distribution to each creditor. In an asset case, the creditor may still pursue a Complaint for the Non Discharge-ability of the debt.
A Chapter 13 case requires all debtors to make monthly payments to the trustee. Upon the filing, the court sends notices to all creditors. The chapter 13 notices include additional information about the case and include a form proof of claim for completion. Each creditor must file a proof of claim with the court. Typically, the creditor takes no further action, whatsoever.
Generally, in New Jersey chapter 13 case, the amount that will be paid to each creditor is handled and enforced by the trustee and not each creditor. In other words, typically creditors take no action to enforce the amount that they may receive. Such creditors do not appear at any hearings or file any court documents that may protect their interests, or possibly increase the amount that is received. The trustee will ensure that each creditor is paid the amount that is required per the bankruptcy laws. Although very unlikely, the creditor may still purse an action of non discharge-ability if they believe that fraud was involved in the use of the credit card.
Robert Manchel may be contacted at 866 503 5644 to discuss your New Jersey bankruptcy law questions.