Niko Villamor

The declaration of bankruptcy spawns a feeding frenzy, a time to negotiate the terms of surrender. The white flag has been raised. If you are in the midst of financial quagmire and unpaid bills start to pile up, there will be a long line of creditors outside your doorstep knocking furiously to secure payment from you. You will receive harassing telephone calls and dirty demand letters telling you to pay up.. .or else! Yes, the law prefers some creditors to others. The law acts as a traffic police officer manning the intersection to prevent vehicles from crashing against each other. Rumblings that this law is unfair have been voiced out over the years. Why should some creditors get paid ahead of others? The reason behind this law is to provide an orderly scheme or sequence for creditors to collect their debts. Based on their status, some creditors would have to be preferred to provide a systematic approach to the problem of who gets paid first. Creditors cannot rush to the door and expect to get paid all at the same time. This situation is conducive to pandemonium. Creditors should initiate legal steps to put liens on your identified properties to make sure that their stake will be respected once your properties are liquidated and sold to pay for your debts. A lien is a charge affecting the property subject to the lien. The law established what is known as “preference of credits” to guide the courts and other persons involved as to who or what gets paid first to avoid a mad scramble. Creditors, claimants and lien holders will line up to be paid out of your estate in accordance with their “preference” under the New Civil Code.