Who Is Making Money Off My Bankruptcy?

Posted in: After Filing, General Bankruptcy

A hidden multi-billion dollar industry surrounds the bankruptcy process, and it’s not the debtors who benefit.  Bankruptcy claims are sold between creditors hoping to ultimately realize a profit when or if those claims are ever paid out of assets of the debtor’s bankruptcy estate.  The transfer also allows the original entity holding the claim to be paid something now, rather than wait on the results of the case.  This transaction is known as a “Transfer of Claim” and can occur several times during the course of the case.

Each time a claim is transferred, bankruptcy court clerks must expend additional time and costs to update records and meet notification requirements.  On May 1, 2013 a new fee went into effect.  The fee of $25.00 per transfer will be paid by the creditor filing evidence of the transfer and will be used to offset the burden on court clerks.  Time will tell if this new fee will have a significant cooling effect on the claims transfer industry.

If you are currently in a bankruptcy, don’t worry: the person going through the bankruptcy will not be affected by the new fee.