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Employer filed Chapter 7. Employees owed payroll.

Riverside, CA |

My employer has filed Chapter 7 2/27/11. The employees have not been paid for hours worked from Jan 16 to Feb 27. What can we do to collect the money owed to us?

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Attorney answers 3


File a creditors claim with the bankruptcy court. Debts for wages earned within 180 of the filing of a bankruptcy are considered to be priority claims & will be among the first to be paid out of the employer's nonexempt assets.

For more information, see 11 USC 507(a)(4).

Although there is no guarantee that your employer will have assets sufficient to pay your past due wages, if you don't file a claim, there is no chance of getting paid. Claim forms are available on the court's website or at the local bankruptcy court clerk's office.

Hope this perspective helps!


You'll want to file a Proof of Claim with the Bankruptcy Court. Wages owed to employees are given Priority status and are generally paid before unsecured claims.


If the notice of filing and meeting of creditors says that the trustee does not expect that there will be any distribution to the creditors then your money is probably gone. That would be a no asset case as most C7 cases and filing a claim woukd be a waste of time. However, if the trustee has informed you of a potentual dividend to creditors (you are a creditors), then make sure you file the claim because you are ahead of the line and likely will get something. You can all attend the meeting of creditors and ask the employer questions (that will make the employer feel bad about screwing his/her own employees of hard earned money since I think an employer that cannot pay wages before paying anyone else should immediately send the employees home unless the employees decide to continue working knowing they might not get paid.)

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