Illinois Bankruptcy Attorney Explains How Creditors Receive Bankrupt...

There are a couple of different ways that creditors will receive notice of your bankruptcy filing.  The first one, is the most common way, and that’s the clerk of the United States Bankruptcy Court will send out a notice that you have filed for bankruptcy.  That notice will indicate the case number, the name and address of the individual filing, and the name and address of the attorney that represents the debtor. 

When a creditor receives this notice they must stop all collection activity. It’s basically a big stop sign that goes up notifying creditors that you filed through bankruptcy and that they can no longer take certain actions against you.  The notice that the creditors receive from the clerk of the bankruptcy court will contain a court date known as a 341 Meeting of Creditors.  This is the date where creditors have the opportunity to appear, and ask the debtor specific questions under oath.

The majority of cases do not involve creditors appearing at 341 meetings.  If a creditor seeks additional information they can contact the attorney directly or they can set their own meeting to interview the debtor known as a 2004 Examination.  The notice also contains a series of other information regarding whether or not certain actions can be taken, where notices need to be filed, and who to contact if they have any questions. 

Another way a creditor will receive a bankruptcy notice is from the law firm directly.  In many cases the law firm needs to notify the creditors prior to the 7 to 10 days it would take for the U.S. Bankruptcy court to send out the notice.  One such example would be to stop a wage garnishment.  Another example would be to notify a utility company to stop a shutoff, such as Commonwealth Edison or Nicor Gas or the telephone company.  

The law firm will also send a written communication, many times, with an accompanying letter notifying the creditor that certain actions need to be stopped.  For example, there might be a pending citation to discover assets or a rule to show causes, which are both post judgment activity taken by a creditor in an effort to collect a debt. 

When those situations are pending there are garnishment issues and there are bank account garnishment issues; so the attorney for the debtor wants to make sure that the creditor knows immediately not to take further court action, not to seize assets, and not to seize wages that belong rightfully to the debtor.