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4 Things You Need to Do When A Customer Files Bankruptcy

4 Things You Need to Do When A Customer Files Bankruptcy
"""Almost 820,000 bankruptcies were filed in 2015,"" If you have received the dreaded notice that a customer has filed for bankruptcy, there are several actions you must take immediately. The bankruptcy filing of a customer does not necessarily mean that you have no rights and will not receive payment on the amount the customer owes you. However, protocols must be followed.

Stop communicating with the client
A bankruptcy establishes new communication guidelines between the insolvent and creditor. From the moment you receive a bankruptcy notice, you are prohibited from contacting the debtor to demand payment. The term for this is an automatic stay. A trustee is appointed to the account and is responsible for managing the debtor's assets and liabilities.

Although the bankruptcy notice will typically include the trustee's contact information, it is unlikely that you will be able to obtain additional information about the bankruptcy until the creditor's meeting. Remember that the trustee's office will not provide you with legal counsel.

Engage a Bankruptcy Lawyer
In addition to representing debtors, bankruptcy attorneys also represent creditors. Moreover, bankruptcy law is complex. If the quantity at stake is substantial, you may wish to have an attorney present during negotiations.

The preference clause is another somber aspect of bankruptcy law, as it prohibits a debtor from favoring one creditor over another. Due to this provision in the bankruptcy code, a trustee will request repayment from every creditor the debtor paid within the 90 days prior to registering for bankruptcy. If the creditor is a relative, business associate, or other insider, the trustee can go back a full year to collect repayment. If you receive this type of demand letter, a bankruptcy attorney may be able to assist you in filing a defense.

File a Statement of Claim
The bankruptcy filing notice you receive will detail the amount the debtor believes he owes you, the reason for the debt, and the deadline for filing a proof of claim. The deadline for the verification of claim will be listed. It is crucial that you submit this proof of claim; if you do not, you will forfeit your right to payment. On a proof of claim form, you indicate what you believe you are owed. This form is reasonably simple and can be completed without the assistance of an attorney.

Attend the Meeting of Creditors
Creditors in a bankruptcy proceeding will be invited to a meeting of creditors, also known as a 341 hearing. The debtor must explain how he or she ended up in a bankruptcy situation during this meeting. Creditors may also pose queries to the debtor. A creditor may also object to the reorganization or repayment plan if they believe their debt is not being treated equitably.

A notice of bankruptcy filing is never welcome, but there are steps you can take to secure as much payment as possible. After all, you deserve some of your hard-earned cash.""

" - https://www.affordablecebu.com/
 

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"4 Things You Need to Do When A Customer Files Bankruptcy" was written by Mary under the Finance / Wealth category. It has been read 137 times and generated 0 comments. The article was created on and updated on 31 May 2023.
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