When a client files for bankruptcy, collecting outstanding debts can become challenging. As a creditor, it’s crucial to understand your rights and the legal options available to you. This article provides an overview of the steps you should take when a client files for bankruptcy to protect your interests.
Understand the Type of Bankruptcy Filed:
• Clients typically file for either Chapter 7 or Chapter 11 bankruptcy. Chapter 7 involves liquidation, while Chapter 11 is a reorganization of debts. The type of bankruptcy determines how and when you may recover any debts.
• Example: A client filed for Chapter 11 bankruptcy, and the business was able to negotiate partial repayment through the court-approved reorganization plan.
File a Proof of Claim:
• In a bankruptcy proceeding, you must file a proof of claim to declare the amount owed to you. This is a formal document submitted to the bankruptcy court.
• Example: A creditor successfully filed a proof of claim and recovered a portion of the debt owed during the bankruptcy proceedings.
Monitor the Bankruptcy Case:
• Stay informed about the status of the bankruptcy case. Your attorney can monitor hearings, court decisions, and asset liquidation to help determine your chances of recovery.
• Example: A debt collection attorney helped a business track the debtor’s case and was able to recover funds from the sale of assets.
Participate in Creditors’ Meetings:
• As a creditor, you are entitled to attend creditors’ meetings during the bankruptcy process. These meetings allow you to ask questions and potentially negotiate better terms for repayment.
• Example: A company attended a creditors’ meeting and secured a more favorable repayment schedule through negotiation.
Seek Legal Representation:
• Bankruptcy law is complex, and having an attorney represent you ensures that your interests are protected. They can handle all legal filings and communications with the court.
• Example: A business recovered a significant portion of a debt after their attorney filed the necessary paperwork and represented them in court.
When a client files for bankruptcy, quick action and legal expertise are essential to recovering as much of the debt as possible. By understanding the process and involving a debt collection attorney, you can protect your financial interests.
Contact us today for more information or discuss your concerns with one of our expert debt collection attorneys at 1-888-401-4008 or visit us online at https://collectionattorneyusa.com. We will give you a detailed plan and use legal tools to ensure you get back your money quickly.
