Unless you are one of the lucky few, it may be safe to assume you have accrued debt throughout your adult life. From student loans to car and mortgage loans, personal debt comes in a variety of different forms.
Creditors are any one person or organization owed money from a debtor. If a creditor finds that they are not being compensated for the money they are owed and entitled to, they may apply to a bankruptcy court in hopes of securing their losses from a debtor.
In certain circumstances, creditors may reserve the ability to force the debtor that owes them into bankruptcy. In the event that this takes place, a court-appointed receiver or trustee would be put in place to secure a debtor’s property until a court rules on the case.
These court-appointed receivers are required to obtain a Petitioning Creditors Bond to ensure that the debtor is compensated if the court case is thrown out or a ruling is made for the debtor.
If you have found yourself in a position that requires a Petition Creditors Bond on your behalf, or are being forced into bankruptcy by a creditor, here is what you need to know in regards to how these Court Bonds may impact you or your property.
Petitioning Creditors Bond: What You Need To Know
Any situation that involves large amounts of money or personal property can make for a sticky situation in court, which is why certain Court Bonds are put in place to protect participating parties.
Petitioning Creditors bonds are not used to protect the individual securing them, but to protect the debtors that are being questioned for any non-compensation accusations from a creditor.
If a creditor forces a debtor into bankruptcy, any court-appointed receiver who is put in place to secure the belongings of a debtor will be required to obtain a Petitioning Creditors Bond.
These bonds will protect the debtor from any costs, damages, or legal fees that are accrued in the event that the petitioner withdraws the petition, or if a court dismisses the case.
Like all bonds, sureties will take a close look at an applicants credit history and/or financial standing. Rates will vary depending on these factors.
Petitioning Creditor Bond: A Closer Look
Mary M. is a single mother who lives in a two-story home in Los Angeles that her former husband Rob purchased.
Rob M. secured a mortgage for the home via Thomas and Trinity Lending (TTL), a mortgage banking institution located in Los Angeles.
Unfortunately, Rob M. recently lost his job fell behind on payments, and despite the fact that Rob was currently in the process of signing the home over to his ex-wife, Mary, TTL chose to impose an involuntary bankruptcy petition. This resulted in a court-appointed trustee to secure the house from Mary and her family until a verdict was made in court.
Mary was originally not from the Los Angeles area and was forced to move to another state to be with her family so she would secure help raising her children. This resulted in the loss of her job and extensive additional financial damages.
The judge overseeing Mary’s case ruled in her favor and imposed that the trustee compensates Mary and her family via the Petitioning Creditor Bond for the damages accrued as a result of the case.
When it comes to securing the right court bond for your needs, it is vital to do your research for a reputable surety who will walk through the process and will secure the bond you need with the least amount of turnaround time.
Surety Bond Authority has over 20 years of insurance and bonding experience, offering the best rates when you need it most. Don’t wait when it comes to your legal and bonding needs, contact our experienced team today: 800-333-7800.