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When a Client Files for Bankruptcy

When a Client Files for Bankruptcy
"""A legal notice that every business owner dreads arrives in the mail: a consumer has filed for bankruptcy and owes you money. What should you do? What should you anticipate?

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

Next, attentively read the bankruptcy notice so you can plan your strategy. Notate 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, also known as a """"341"""" meeting; and the deadline for filing a non-dischargeability action, which is a petition to the court requesting that the debt you owe not be discharged in the bankruptcy. Also make a note of the bankruptcy court's trustee and location.

The claims bar date is especially crucial, as failure to file a claim with the appropriate bankruptcy court on or before the deadline will likely eradicate any chance of recovery. The initial notice should include the trustee's and bankruptcy court's names and addresses. Although trustees cannot provide legal counsel, they can and will typically address routine questions about the case's status, asset recovery, and important dates. The court can provide the appropriate claim forms.

If you are unfamiliar with bankruptcy proceedings, you should consult with a bankruptcy attorney whose practice concentrates on creditors' rights to ensure that you have a thorough understanding of your options and can choose the best course of action. Do this as quickly as feasible to avoid missing the claims bar date.

Do not assume that you will never recover what is owed to you, particularly if the company has filed for bankruptcy to reorganize. Despite the fact that you may not be paid, many companies emerge from bankruptcy stronger and able to pay their expenses. You may even be able to continue working on a cash basis with these companies while they are in bankruptcy. In addition, many liquidated companies are able to pay at least a portion of their debts with the proceeds from the sale of their assets.

" - https://www.affordablecebu.com/

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"When a Client Files for Bankruptcy" was written by Mary under the Finance / Wealth category. It has been read 68 times and generated 0 comments. The article was created on and updated on 02 June 2023.
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