When a Customer Declares Bankruptcy


The mail hits your desk and in it is a legal notice every business owner dreads: a customer has filed bankruptcy, owing you money. What should you do, and what can you expect?

First, stop all collection activities. "The automatic stay [which is essentially a federal injunction which prohibits collection efforts while the case is pending] descends like an iron curtain and operates as an absolute bar to further collection activities," says David Gamache, an attorney St. Louis, Missouri. "If the matter has been placed for collection, the attorney or agency should be notified immediately by telephone with a follow-up copy of the bankruptcy notice."

Bankruptcy Lawyers In Salt Lake City, Best Bankruptcy Attorney, Blockbuster Bankruptcy,

Next, read the notice of bankruptcy carefully so you can plan your strategy. Make note of important dates, such as the claims bar date, which is the deadline by which a proof of claim must be filed to allow a creditor to share in any distribution of funds; the date of the creditors' meeting, which is also called a "341" meeting; and the deadline for filing a non-dischargeability action, which is a petition to the court that the debt you are owed not be discharged in the bankruptcy. Also make a note of the trustee and the location of the bankruptcy court.

The claims bar date is particularly important because failure to file a claim with the appropriate bankruptcy court in a timely fashion likely eliminates any chance of recovery. The name and address of the trustee and of the bankruptcy court should be on the initial notice. Although trustees cannot give you legal advice, they can and usually will answer routine questions related to the status of the case, asset recovery and important deadlines. You can obtain appropriate claims forms from the court.

If you are unfamiliar with bankruptcy proceedings, consulting with a bankruptcy attorney whose practice focuses on creditors' rights to make sure you fully understand your options and can make a decision on the best course of action. Do this as soon as possible so that you don't miss the claims bar date.

Finally, don't just assume that you'll never collect what you're owed, especially if the company has filed for bankruptcy protection to reorganize. While you may not get paid, it's also true that many companies emerge from bankruptcy stronger than before and able to pay their bills. Those companies will likely want to maintain their supplier relationships and you may even be able to continue working with them on a cash basis while they are in bankruptcy. In addition, many companies that are liquidated are able to pay creditors at least a portion of their debts with the proceeds of the liquidated assets.


Bankruptcy Attorney Dallas

Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.

Rating of Bankruptcy Attorney Dallas




Get Online Application at online Bankruptcy Lawyer.

0 comments:

Post a Comment