Question

What are the pros and cons of an unsecured creditor? What are the rights of these creditors in the case where a debtor files for Chapter 7 bankruptcy? Please discuss.

Make your Initial posting by Wednesday ( 300 word minimum) Please break down the pros and cons detailed thank you

Answer 1

Unsecured creditors are the individual or the institution who lends the money without keeping or obtaining any types of assets or collateral. Unsecured creditor will have highest interest rates for the money owned to the creditor

Pros

• It is easier to obtain for the debtor- it has less procedure to obtain the loan - because business does not need supply collateral.
• Shorter repayment terms
• No asset risk involved - if debtor don't have any property then this loan is useful and debtor no need to worry about losing their property
• it has high interest rates - advantage for creditor
• no tax benefits - advantage for creditor
• It allow borrower to pay long term with shorter amount of money - its benefit for debtor

Cons

• It has high risk to the creditor , because they will not have anything fall back on should the debtor default on the loan - and high rates and tedious application process
• If the debtor files for the bankruptcy , then the court may discharge the loans- its disadvantage for unsecured creditors
• Loan amount will be smaller- disadvantage for debtor
• It allow borrower to pay long term with shorter amount of money with highest interest rate - dis advantage for debtor.

Right of the unsecured creditor when debtor files for bankruptcy

Sometimes the creditor gets bankruptcy and they will think that they don't have any rights and also they don't have any alternatives with respect to the claims against the debtor. so most of the time they quite. Unsecured creditors are mostly includes supplier of goods as well as service. in the situation of the non payment accounts the unsecured creditors will first takes the decision to withhold the future delivery of the goods and services. or in some other cases they will deliver the goods or service only on the basis of cash on delivery.if a business negotiate the enough payment terms then the unsecured creditor can take the legal action against debtor by issuing the statement from the court by claiming and proceeding through the court to get the proper judgement. An unsecured creditor has the right to apply the court against the bankrupt of the debtor, in case of solo property ownership or the company. They an even seize the assets of the business or the person for unpaid loan. they even can terminate the lease.