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Shielding your interests when a customer files bankruptcy

The bankruptcy laws provide consumers and consumer businesses with a variety of protections should they find themselves in an untenable financial situation. For example, as soon as a bankruptcy petition is filed, creditors must cease collection activity, and if a consumer or business can provide the right information and goes through the process, they are likely to be granted a discharge or approval of a Chapter 13 reorganization plan.

It might seem that, as a business, there is nothing you can do if someone who owes you money files for bankruptcy. For many businesses, the thought process is that bankruptcy means an automatic write off and loss on the books, but that might not be true.

While consumers and debtors do have rights, so do you. As a creditor, you don't simply have to acquiesce to a bankruptcy, especially if you have evidence that the person filing is not being truthful or is hiding assets.

Even if the bankruptcy is legitimate, it's important to exercise your rights by submitting claims in a timely manner. If you fail to make a claim with the bankruptcy court by the deadline in the case, you could essentially forfeit any amount owed to you. If you are named as a creditor in a case and do make a claim, you might at least get some payment.

If you are not named as a creditor in a case because the person filing overlooked you, then you might not be governed by the bankruptcy rules at all. Working with an experienced business law professional can help you understand what you can and can't do to protect your assets and seek payment on your accounts. Our firm works on your behalf to limit the financial damage that might come from someone else filing bankruptcy.

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