Chapter 13 bankruptcy is one of the best ways to safeguard the property and pay off the debts. It gives an opportunity to a debtor to adjust his/her debts according to the regular income.

The whole process usually takes 3 to 5 years, but with time, the debtor can manage the situation in a better way.

However, not only the debtor, the bankruptcy code implemented some rights for creditors, too. They are discussed below.


  • Has full right to ask questions to the debtor
  • Can check the debtor's financial affairs or documents
  • Can get their payment in any form from the bankruptcy assets as per the claim
  • Can challenge the debtor's discharge
But the million dollar question is, how many creditors are actually aware of their rights?

So, here is a bunch of guidelines that are essential for creditors. They should know what they should or shouldn't do in chapter 13 bankruptcy.

What a creditor SHOULD DO in a chapter 13 bankruptcy

1. Attend the creditors’ meeting

As per the bankruptcy code, the debtor needs to be present at the meeting of creditors along with financial information, proof of current income status, bank statements, and other documents of monthly expenses. A creditor can also ask the debtor to bring tax return documents to the meeting.

Creditors have all right to ask questions to the debtor to clarify their queries in the meeting.

2. Check debtors' documents

A creditor’s first duty is to check all financial statements and schedules of a debtor. A debtor in chapter 13 bankruptcy needs to schedule all financial statements and listing of the assets within 14 days of the filing. The debtor should file documents of his/her current monthly income too.

After these, a creditor needs to check all the documents to know whether or not the debtor has supplied all the important papers with correct information about the claim.

A creditor should review the debtor's income and debts to confirm the practicality of the plan as well.

3. Know all deadlines

Generally, in chapter 13 bankruptcy, the initial notice contains all dates of the event, last date of the meeting with the creditor, and the date to file the proof of claim. So, a creditor should be aware of all the deadlines to avoid any miscommunication.

4. Hire an attorney, if required

In chapter 13 bankruptcy, an attorney is not always required to attend the creditors’ meeting. But, some cases require hiring an attorney.

A well-experienced attorney can help the creditor to decompose all the applicable rules, proofs and other supports (if required).

For example:

  • If the case requires the resources to claim
  • If the case is complicated
  • If the claims need special support

What a creditor SHOULDN'T DO in a chapter 13 bankruptcy

1. Ignore the federal and local rules

A creditor shouldn’t avoid federal and local rules. The federal rules and local rules can be revised from year to year. So, creditors should be aware of all the rules of bankruptcy courts.

2. Proceed against a co-debtor

Only chapter 13 bankruptcy allows a stay of action against the non-filing co-debtor along with the debtor. A creditor is not allowed to take any legal action to collect debts from any person who is liable for the unpaid balance.

However, a creditor can file a request to terminate the stay of the co-debtor.

3. Violate the automatic stay

If a debtor files chapter 13 bankruptcy, an automatic stay will stop the creditor from taking actions. The stay will stop all legal actions against the debtor. The creditor must stop taking all actions, such as collection calls to the debtor, enforce any lien against the debtor's property, foreclosures, and so on.

If a creditor violates the automatic stay, then he is liable to pay the damages to the debtor including attorney fees, punitive damages, cost, etc.

4. Be afraid to take the case to the court

If the debtor does not propose or confirm a suitable plan after contacting several times, or the creditor fails to negotiate with the debtor, then the creditor has the right to involve the court to convert the chapter 13 to a chapter 7 or to disqualify the debtor’s chapter 13 case.

Finally, it is always advisable for creditors to learn their rights and limitations to minimize the risk in chapter 13 bankruptcy.

Read more:

Know about chapter 13 bankruptcy in detail What is an automatic stay?

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