Difference Between a Debtor and a Creditor in a St. Louis Bankruptcy

The two main players in a Missouri bankruptcy are the creditors and the debtor (or debtors, if it is a joint filing between a husband and wife). A creditor is an individual, company, or institution that holds a lien, loan, or monetary interest against another individual, company, or institution who has agreed to pay back the amount loaned. Creditors usually provide some sort of goods or services in exchange for the money to be received. If the creditor does not receive compensation for its goods or services, its remedies include reasonable attempts at collection, negotiating a settlement, or filing suit against the other party to the contract.

When someone files a St. Louis bankruptcy, all of that person’s creditors have a right to be notified of the fact that a bankruptcy has been filed. The creditor then has the option of filing its own documentation with the court showing that a debt is in fact owed to it. This document is called a ‘Proof of Claim’. A Proof of Claim states the name and address of the creditor, what kind of debt it is, and how much is still owed (and very frequently, the creditor will additionally attach the original contract between the parties as further proof of its claim of indebtedness). This document is used by the court to determine if and/or how much money should be paid back to the creditor in question. In a St. Louis Chapter 7 bankruptcy, this is typically nothing at all (since a Missouri or Illinois Chapter 7 is described as a discharge of unsecured debts, like St. Louis credit cards, medical bills, payday loans, etc.); in a St. Louis Chapter 13 bankruptcy, there is a chance that a portion of the total unsecured debts owed will be paid back over a period of three to five years (but depending on the circumstances, there is also a chance that all of the unsecured debt would be discharged as well).

The debtor is the individual(s) who has filed for bankruptcy, who owes on any number of debts (whether they be secured, unsecured, or priority debts), and is seeking a discharge of all money owed. Debtors are required by law to disclose all pertinent information to the court, Trustee and their St. Louis bankruptcy lawyer regarding their financial standing. This would include any and all sources of income, a list of all assets, a list of all property (real and personal), a description of all creditors and amounts owed, and other necessary information such as charitable contributions, gifts, transfers, and items sold or given away in the year prior to filing. Depending on the circumstances, the debtor may find it best to file one type of bankruptcy as opposed to another after consultation with his/her attorney.

The affordable St. Louis bankruptcy attorneys at The Bankruptcy Company pride themselves in always taking the time and effort to make our client completely informed as to their rights and options. Our goal is to make sure that you understand how the process works, and set you on a path towards financial freedom.