Skip to main content

Steps to Follow while Collecting Money from a Bankrupt Client

Clients filing for bankruptcy is very common. If you come to know that one of your clients is seeking bankruptcy to sort out his or her financial problems, don’t be surprised or worried. There are certain rules and regulations in the bankruptcy process that both the debtor and creditor have to follow.
One of the plus points of bankruptcy is that it is not as formal as the typical court giving strict instructions to solve the matter. It is like making a deal and negotiating a resolution in your favor.

So, if your client owes you money, consider the following steps while collecting the debts:

1. Consider the Type of Bankruptcy Filed:
With the type of bankruptcy filed, means the way clients intends to handle the debts. Chapter 11 and Chapter 13 are filed to reorganize the debt. The debtor receives a repayment plan that he or she has to follow to repay the debts. Chapter 11 bankruptcy is used for corporations while Chapter 13 is for sole proprietors and individuals. 
However, Chapter 7 bankruptcy means that the client intends to walk away from as much debt as possible through discharging debts and liquidating assets. The court distributes non-exempt assets among creditors.

2. Limit or Stop the Contact Entirely:  
One the bankruptcy is filed, stop the contact immediately to collect the money and collection activities. Otherwise, you will be breaking the bankruptcy code and may be sued. This is regardless of the fact that you have filed a case against the client because the case stays till the completion of the bankruptcy. 
If you are living in Chicago and want to know how your debts will be handled,
 you can contact the bankruptcy attorney in Chicago. 

3. Don’t Forget Doing a Cost-Benefit Analysis: 
It is wise to do a cost-benefit analysis before collecting a debt. That means to determine whether it is worth your time and energy and will you really get your money back or not. Take for example, if a business grosses more than $500,000 but has debts over $10 million, with a long list of creditors, it is more likely that you will not get your money back. 
Moreover, the consumer and or small companies don’t have tangible assets that can be sold by the trustee and distributed among the creditors.

4. Consider Filing a Proof of Claim:
If the creditors feel that they have a chance of success in receiving a portion of a debt, they should file a proof of claim. This reflects the creditor’s desire should be the part of the bankruptcy proceeding. In this case, you, as a creditor, need to submit contracts, business records, and communications to verify the debt. Don’t skip this step, otherwise, you will not be repaid. After the bankruptcy proceedings, the trustee is asked to pay creditors from the rest of the funds. 

5. Attend Creditors Meetings: 
The meetings with the court-appointed trustee, debtors, and creditors are essential to attend. During the meeting, the debtors explain how the situation got worse, and what is going to be done about it. You can also object the debt repayment or reorganization plan. 
While considering to recover the debt amount, the right approach is to consult the bankruptcy attorney, to take the right course of action.

Comments

Popular posts from this blog

Benefits Of Home Automation And Smart Appliances

Any human being living on this Mother Earth needs three factors for survival. They are food, clothing, and shelter. And when you have your own home, it is the safest place for your family members. There is seldom any home, in any part of the developed world, which does not have home appliances. In recent times, it is home automation which is the order of the day. In this article, let us discuss the benefits of home automation and smart appliances.




So, what was the first impression you got on the title? Saving money and state-of-the-art electronic appliances. Shall we look at some?
1. Benefits Of Home Automation - Savings






Let it be any smart home electronic appliance, they will save energy. Yes, they may be more expensive, but they will cut utility costs. There are some appliances which can be used for monitoring water usage. So, they can put a firm control on huge water bills.
2. Benefits Of Home Automation – Safety


When it comes to home automation technologies, prime importance is given t…

9 Realistic Marketing Techniques for Gift Cards Online

Gift cards online are an effective way to drive sales and attract more customers. It encourages return visits to the e-retail site, and thus is one of the most important tools to leverage a business that has its presence on the internet. Marketing a gift voucher is best achieved during a peak season and holidays, such as Mother’s Day, Valentine’s Day, etc. We find several gift shops on the internet using the tactic of gift cards to tap new and old customers.

 So what is a Gift Card?
A gift card is simply a prepaid stoned-value money card issued by the retailer. The same can be utilized as alternative to cash payment for any goods or services purchased from the specific retailer or related business. It has been found that customers prefer gifting a gift coupon to others rather than hard cash or an item. Several shopping sites such as Amazon, Flipkart and similar competitors have also introduced the system of gift vouchers, today.

Gift cards online come in two basic formats: 


Electronic Gi…

Raksha Bandhan(Rakhi): The Festival of Bond and Strength

Saga of Raksha Bandhan(Rakhi)
One of the most celebrated festival in India Raksha Bandhan also known as “Rakhi” falls in the month of August. Rakhi defines the bond between a brother and sister, which is one of the most special bond of nature. According to Mahabharata “Draupadi- wife of Pandavas” tied a piece of her cloth on the wounded hands of Lord Krishna, and in return Lord Krishna Later protected Draupadi from Kauravas by supernaturally providing her with Sari of infinite length, when the Kauravas were trying to disrobe her.




From then till now this act is being practiced all over India which shows the love between brother and sister.  In this Sister ties “Rakhi- thread of strength” on the wrist of her brother which is followed by exchanging sweets and gifts to each other. By tying Rakhi she prays for the long life of her brother and lets him know that he is the most precious person in her life.  The brother then promises to be with her in every ups and downs in life and protect …