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A business that owes me money and is filing bankruptcy. How do I get my money?

Stuart, FL |

I performed services and my business is owed $2400.00. The company that owes me money is filing for bankruptcy or already has. Do I go to small claims court? Or how do I move forward if they are filing/ filed for bankruptcy?

Attorney Answers 4

  1. You are a creditor of this business. If they file bankruptcy, and it is a no-asset BK, you will get nothing. If it is an ASSET case, you will file a claim and might get some or all of your money, depending upon how many other creditors file claims. Good luck.

    Be sure to designate "best answer." If you live in Oregon, you may call me for more detailed advice, 503-650-9662. Please be aware that each answer on this website is based upon the facts, or lack thereof, provided in the question. To be sure you get complete and comprehensive answers, based upon the totality of your situation, contact a local attorney who specializes in the area of law that involves your legal problem. Diane L. Gruber has been practicing law in Oregon for 26 years, specializing in family law, bankruptcy, estate planning and probate. Note: Diane L. Gruber does not represent you until a written fee agreement has been signed by you and Diane L. Gruber, and the fee listed in the agreement has been paid.

  2. Do not take ANY action without the permission of the bankruptcy court. Otherwise, you will end up owing the other party for violating the automatic stay, which is a court order prohibiting any further collection activity without the consent of the bankruptcy court.

    I assume that this is an unsecured claim. If the case is filed under Chapter 7, your choices are very limited. If the bankruptcy trustee recovers money, you may file a claim and get paid a prorata share of the money paid. You can file an adversarial proceeding to object to your debt being discharged, but the reasons to object are very limited. Also, the amount in controversy is typically too small to make it worthwhile from an investment/pragmatic point of view.

    If filed under Chapter 13, your will need to file a proof of claim asserting the amount owed. You again will be paid a prorated amount of money paid to unsecured creditors.

    Chapter 11 is too complex for a simple blog discussion. For the best advice regarding this matter, obtain a consultation with a qualified bankruptcy attorney.

    The response given is general in nature and based upon limited information. It does not and cannot replace that of a proper consultation with a qualified attorney. You should not act upon this Information alone, but should seek legal counsel prior to taking any action.

  3. The admonition of Mr. Heller, and the explanation of Ms. Gruber, are both correct. As a creditor to a debtor who has petitioned for bankruptcy protection, your collection actions are severely limited. Rather than rely on the limited information about the law and legal procedure we can provide on this public Q&A, consulting with local creditor's-rights counsel would be prudent.

    Best wishes for an outcome you can accept, and please remember to designate a best answer.

    This answer is offered as a public service for general information only and may not be relied upon as legal advice.

  4. If a bankruptcy has been filed, DO NOT GO TO SMALL CLAIMS COURT! You will receive a notice that the case has been filed and instructions on how and whether to file a claim. If there are no assets to distribute, you will get nothing. Most cases have few or no assets.

    Posting questions anonymously and receiving general answers do not substitute for consulting with an attorney licensed to practice in the jurisdiction in which you live. Answers posted here by Kevin C Gleason are only intended for general education of the public on legal matters. Please consult a qualified professional before deciding what to do about your situation.

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