Legal Question in Bankruptcy in North Carolina

It is often the case that unsecured creditors receive no dividend in a bankruptcy. The purpose of bankruptcy is to discharge debt to provide a fresh start to the debtor. There are four ways you might recover some or all of the debt. 1. If this is a Chapter 13 and you file a timely proof of claim you are eligible to receive your pro-rata distribution under the plan. That is, the debtor in a Chapter 13 is obligated to file a plan of payments in which he/she commits all of his/her net disposable income to be distributed by the trustee. Check the plan for the distribution to unsecured creditors. 2. If the plan is a Chapter 7, and the trustee administers assets, you could see a distribution from the Chapter 7 trustee. Again, you have to file a proof of claim. The trustee can only administer assets that are not exempt. Check the schedules and the exemptions. If the case does not have assets, you will be notified on the Notice not to file a proof unless the trustee reports that there will be assets and asks for proofs to be filed. 3. If the debtor obtained the loan by fraud or other circumstances, your debt may survive the discharge. This usually requires that you file suit in the bankruptcy. 4. The debtor has the right to pay you anyway. If in a Chapter 7 it can begin immediately, if in a Chapter 13 it must be within the plan and other rules. After the Chapter 13 plan is finished, the debtor is permitted to pay you anyway. Of course, if you hold collateral, then you are permitted to apply to the court for consent to repossess the collateral and sell it to recover.