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Bernstein Burkley
  • Practice Areas
    • Overview
    • Bankruptcy & Restructuring
    • Business and Corporate Transactions
    • Creditors’ Rights
    • Litigation
    • Oil & Gas and Energy
    • Real Estate
    • Real Estate & Commercial Finance
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Q&A
Q&A

What should I do if I hear that my customer filed bankruptcy?

Posted on October 29, 2012 by Bob Bernstein

Finding Out About a Customer’s Bankruptcy

Q: I heard through a third party that my customer filed bankruptcy but I have never received official notification. Is there anything I should do to protect my interests?

A: If you find out about a bankruptcy in any way before the deadline to file a claim, you will be treated as if you had been officially notified. If you fail to take affirmative action by filing a Proof of Claim with the bankruptcy court, you will lose your right to assert a claim in the bankruptcy case and the debt will be discharged. A discharged debt leaves you no recourse to collect from your customer anytime in the future. In some instances, however, it may not be worth your while to assert a claim. If the bankrupt party has no assets from which payment can be made-a no asset case-then the result will be the same. Your debt will be discharged. Depending on the amount owed, it may be prudent to consult with a bankruptcy expert who can determine whether the debtor has assets before going through the expense of filing a claim.

 

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