If someone has an unpaid debt to your business and files for bankruptcy, it can be challenging to know how to proceed to ensure you obtain as much money as possible on the debt. The best course of action is to consult with a lawyer who understands how business collections work in the bankruptcy process. The following is some brief information about the process.
While ceasing collection efforts may seem counter-intuitive, the court will likely order an automatic stay as soon as the bankruptcy is filed that requires halting all legal claims and collection attempts. If you violate this order, you could face liability.
Review the Filing
Debtors must list all of their debts and assets in their bankruptcy, which can help you predict your chances of success regarding debt collection.
Attend the Creditors’ Meeting
You have the opportunity to meet with the debtor and bankruptcy trustee to clarify your unpaid debts and any assets that may be relevant to the satisfaction of your claim.
Fighting Preference Claims
In some cases, the Bankruptcy Code allows a debtor to file a preference claim to attempt to retrieve money they have already paid toward their debts. There are specific ways to defend against these claims, however, and an attorney can help you do so.
File your Proof of Claim
This is the paperwork stating that you would like to seek payment of the debt through bankruptcy and proving that your claim is valid. If your debt is disputed, you may need to attend a hearing in court. Then you will have to wait for payment either through assets and property liquidation in Chapter 7 or a payment plan in Chapter 11.
Contact an Experienced Houston Business to Business Collections Attorney Today
If you are owed money by another business, you should not think that collection is impossible if the owners have filed for bankruptcy. With the assistance of a skilled business to business collections lawyer, you have a good chance of obtaining at least partial payment for your debts. At the Weisblatt Law Firm, we can help you collect business debts before or during a bankruptcy. Please call us at 713-666-1981 to discuss your situation today.