Creditor

A creditor is the person or entity owed money by a debtor. In bankruptcy proceedings, there are two types of creditors- secured and unsecured. A secured creditor in the bankruptcy process is a creditor that has filed a claim with the bankruptcy court and has a secured debt claim against the filing debtor. An unsecured creditor is a creditor that has filed a claim with the bankruptcy court and has an unsecured debt claim against the filing debtor. Each creditor must file a claim in bankruptcy court if they want to be a part of the bankruptcy process.

For a secured creditor, the finalization of their debt does not necessarily end with the bankruptcy proceedings. Until recently, bankruptcy proceedings had no effect on the original secured contract, but the 2007 financial crisis has significantly changed that relationship (see Cramming Down a Loan).

By making a valid claim, the bankruptcy court recognizes the creditor's potential right to participate in the bankruptcy process. A creditor filing a claim can attend the 341 creditor's meeting to ask the debtor questions, to make formal objections to any bankruptcy proceedings, or to possibly serve on certain creditor committees to oversee the bankruptcy process.