When you started your small business here in Jackson, you did so with the intention of building relationships with your customers or clients. You provide them with your goods or services, and you receive payment in return. The process seems simple, but it can quickly become complicated.
You may feel awkward approaching your customer or client for payment, but you know you need to do it. However, at some point during your negotiation process, the other party filed for bankruptcy protection. You found out because you received a notice from the bankruptcy court.
What do you do now?
Not every person who files for Chapter 7 bankruptcy can exempt all of his or her property. The trustee may sell any property that doesn’t fall under a federal or state exemption in order to pay creditors.
If the trustee declares the case an asset case, which means there is property to sell to pay creditors, then notices will be sent out to all of the filer’s creditors. If you want to be on the list of creditors who may receive at least partial payment of the debt owed to you, you will need to file a proof of claim with the bankruptcy court.
Before the deadline set by the court passes, you will need to complete the form and attach all relevant documentation supporting your claim. This may seem like a fairly simple process, but you will need to know how to categorize your claim in order to make sure you are in the best position possible for payment.
The debts are paid in an order established in the U.S. Bankruptcy Code. The opportunity to file a proof of claim in a Chapter 13 or 11 may also arise. However, each chapter has its own deadlines.
Some support may help
The chances of receiving payment depend on a variety of factors, including what chapter the debtor files. If you miss the deadline set out by the court or fail to include all of the pertinent information and documentation, you may not have the chance to get paid. If you find yourself in the position of trying to secure payment from a customer or client who filed bankruptcy, you may benefit from working with an attorney experienced in helping protect the rights of creditors like you.