Party In Interest
The bankruptcy code is precise in providing information about the process as well as the function of everyone include in the process. Among the terminologies mentioned in bankruptcy proceedings is party in interest, resulting to people asking about what this term is.
Defining a Party in Interest
A party in interest refers to an individual or entities that have something at stake with the bankruptcy’s outcome. They are the individuals who are interested to the outcome due to the results effect on the bankruptcy procedure or if repayment is going to be possible.
In essence, individuals and entities involved in the bankruptcy case are party in interest like the debtor, creditors, and trustees. They have the right to attend court hearings related to the bankruptcy case though it may not be mandatory. Party of interest may also have the right to object to claims or other aspects of the bankruptcy case if he finds some inconsistencies in the process. Their right to object, however, may depend on the chapter the bankruptcy case is filed.
Party in Interest’s Function According to Bankruptcy Code
As individuals who are after the result of bankruptcy for their own benefits, a party of interest has different function in the case. A party of interest may object to specific claims. Their right to object, however, differs depending on the chapter. For example, a party of interest can object against a claim under Chapter 7 bankruptcy. A party of interest with the right to object under this chapter is generally the trustee. A debtor doesn’t qualify as a party of interest to object against a claim. However, debtors may be given the right to object in cases of inconsistencies with the trustee’s way of handling claims or if the debt is deemed as not dischargeable.
In chapter 13 bankruptcy, all entities involved in the bankruptcy case are parties in interest. Though there are cases when a debtor may still be excluded as a party of interest, the scenario is rare is rare.
Another function is attending 341 hearings conducted as part of the bankruptcy case. Through the meeting, parties of interest, particularly creditors, can attend and raise questions regarding the bankruptcy case or other inconsistencies that strip debtors the chance of getting discharged from bankruptcy. Examples of inconsistencies are possibilities of fraudulent activities. The creditor as a party in interest may file for a petition to strip debtors of their eligibility from getting discharged. They, however, would need to conduct their investigations. There’s a deadline for filing for petition filing and investigation. If creditors didn’t meet this deadline, the petition will be dropped and the debtor can be discharged.
Consulting a Bankruptcy Lawyer
A party of interest should know if he possesses such title in a bankruptcy case, especially in the casse of debtors. Debtors can consult their bankruptcy attorneys for information about their status in the case and what they can do in the process.
Knowing what a party of interest is can be beneficial, especially in the case of debtors. Consult with an expert to know about your function in the case and potential challenges that may come along the way if you’re a debtor filing for bankruptcy.