FAQ: What are the Three Types of Creditors?
There are different types of creditors from whom you can borrow money. Your trustee will need to know the details of all your creditors, including the security each creditor holds. A creditor can become involved in the process by participating in meetings of creditors, and are also given, among other things, a statement of affairs and statement of receipts and disbursement.
Three different types of creditor’s are as follows:
Secured Creditors: a person holding a mortgage, lien, charge, pledge, or privilege against an asset of the bankrupt person as a security for a debt due. This type of creditor is not usually affected by a bankruptcy or proposal.
Unsecured Creditors: These creditors are entitled to the remaining assets after the secured creditors are paid. Many debts such as credit cards, personal lines of credit or overdrafts fall into this category. These creditors are not guaranteed repayment.
Preferred Creditors: Although preferred creditors are unsecured, they are paid first. Funeral expenses in the case of a deceased bankrupt person are usually a preferred claim. This also includes unpaid wages, commissions, remunerations of an employee of a debtor, and obligations to support a spouse or child.
If you have any questions about your debts, and want to talk about your options, contact C.E Craig & Associates today for a FREE consultation.
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