Have a Customer That Declared Bankruptcy? What You Need to Do
If you have a customer that owes you a lot of money and they have declared bankruptcy, you need to do some things to make sure you get the money owed to you. Below is some information about this so you can be sure you do not lose out.
Do Not Contact Your Customer
The court sends out a bankruptcy notice to all creditors the debtor owes money to. Once you receive this notice you should not contact your customer and ask them for your payment. You could get fined if you do this because it is not allowed in a case like this. This is known as an automatic stay. The court assigns a trustee to the debtor and this person oversees all of their debts and assets.
The bankruptcy notice that you receive will likely show the trustee's name and their contact information. If you contact this person, however, they will likely not give you any information. You will have to wait until there is a creditors meeting.
Hire a Bankruptcy Lawyer
The best thing you can do is to hire a bankruptcy lawyer to help you in a situation like this. You may think a bankruptcy lawyer only works with debtors but they also work with creditors, such as yourself. Bankruptcy law is very difficult to understand and without the lawyer you would likely make a lot of mistakes, which may lead to you losing money.
For example, you will receive a proof of claim notice from the trustee, which lists how much money the debtor owes you and why they owe you this amount. You have to file this proof of claim on time or you will not get paid. Your bankruptcy lawyer can help you with this to ensure it gets filed correctly.
Go to the Creditors Meeting
As a creditor, the trustee will contact you and invite you to a creditors meeting. During the meeting, the debtor explains why they had to do this, such as how many debts they owe, and how many debts they are late on.
You can ask the debtor questions during the meeting. The trustee will also ask the debtor a lot of questions. For example, they will ask the debtor to write down the creditors they owe and how much they owe them. You should make sure that your name is on this list. The debtor will be asked to show the trustee financial information, such as a bank statement. The trustee may try to set up a repayment plan with you to help the debtor. You should not agree to this plan without your lawyer.
Your bankruptcy lawyer can go over all this information with you in much more detail so you can have a better understanding of what you need to do.