The Good and Bad of a Bankruptcy Filing

As a creditor’s lawyer, I know how common it is for borrowers to quickly file bankruptcy in response to collections, but I am well aware that there remains a strong stigma attached to filing bankruptcy. This Inside Tuscon Business article discusses some of the most common “myths” about the impact of a bankruptcy filing.

Again, from a creditor’s perspective, a bankruptcy filing isn’t always the worst development. On one hand, a creditor is limited from collection on the few remaining assets, but, on the other, so are all the other creditors–a Trustee is appointed and the assets are administered by the Trustee, equally. Further, if the claim is secured by collateral, then a creditor has a variety of protections that can prompt surrender or payment.

Again, it’s preferred to be paid in full outside of bankruptcy, but, when dealing with some borrowers, the bright light of full disclosure that comes with a bankruptcy filing is a good thing.

Author: David

I am a creditors rights and commercial litigation attorney in Nashville, Tennessee.

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