I have a small business. One of my customers just declared bankruptcy while owing me over $2,000. What can I do to make sure I get paid in the bankruptcy settlement?
2006-10-11 07:19:57 · 11 answers · asked by luckylab8 3 in Business & Finance ➔ Small Business
What is the difference between a secured and an unsecured claim? And how do I know which one my claim would be? (the customer is a general contractor and I am a subcontractor to whom the general contractor owes money for a completed job)
2006-10-11 07:51:51 · update #1
Reviewing our credit policy isn't an option--we're a contractor, so all sales are on a contract basis. We do the work, then the customer pays us. Legally, we cannot require more than a 10% down payment to secure the contract.
2006-10-11 07:54:10 · update #2
ouch, i'm sorry to hear that.
as a creditor, you must file paperwork to support your claim in the bankruptcy proceedings. a hearing will be scheduled, which you should attend. the bankruptcy court/trustee will approve a bankruptcy plan, in which you may or may not see any money in.
you will be one of the last in line for the bankrupt's assets. if your customer has any priority claims supported by UCC-1 filings, then they will have priority over your claim.
2006-10-11 07:46:08 · answer #1 · answered by loveholio 5 · 0⤊ 0⤋
I think you're pretty much out of luck. A "secured" loan is a debt which has been collateralized by some asset-think along the lines of your mortgage loan being secured by your house. Also, in bankruptcy, there is a predetermined order of who gets paid first. All secured creditors get paid first, all lawyers and accountants get paid, the IRS gets paid, then whatever is left will be divided up among creditors who petition to get paid through the bankruptcy proceedings. It's highly unlikely that you'll get your full $2,000 back. This is one of the hazards of being a small business-you frequently lose out to the big guys with big legal departments that make sure all debts are attached to assets.
Good luck!
2006-10-11 09:36:55 · answer #2 · answered by SuzeY 5 · 0⤊ 0⤋
You as a "creditor" will receive a notice in the mail stating when your customer is to appear in bankruptcy court. All creditors are given the opportunity to contest, I think that's the right terminology, the bankruptcy and make a final attempt to collect on the money owed. After the bankruptcy is discharged and no arrangements have been made for you to receive payment, it will be illegal for you to attempt to collect from your customer. I had a family member declare a couple of years ago and she gave me all the details about the whole thing. Good luck.
2006-10-11 07:30:13 · answer #3 · answered by WREAGLE 3 · 0⤊ 0⤋
If you are a listed creditor on the bankrutcy, the court will notify you about filing a claim against the assets. If you were not listed, you should notify the court. There are forms that you will need to file. The priorities on the distribution of any assets are 1. Taxes, 2. Secured Creditors, 3. Unsecured Creditors. The odds are against you collecting anything.
2006-10-11 07:34:53 · answer #4 · answered by WJVV 4 · 0⤊ 0⤋
It is not entirely hopeless, but it is not good either. Normally, when a person/business files bankrupcy their debts outnumber their assets. You are somewhere in the middle of the pack in claims against assets. Look at the bright side. You can take it off your income taxes.
You may want to review your policy concerning credit on purchases. CIA works well.
2006-10-11 07:42:10 · answer #5 · answered by Anonymous · 0⤊ 0⤋
You may want to talk to a lawyer and see where you stand and if what the customer owes you is affected by the bankruptcy.
2006-10-11 07:28:08 · answer #6 · answered by suz' 5 · 0⤊ 0⤋
Well I have a feeling you are out of luck. Depending on the laws there, you may get a small amount, but you won't get the whole balance. I'd check with a lawyer about this. There has to be some reimbursment...
2006-10-11 07:28:10 · answer #7 · answered by Nikki 6 · 0⤊ 0⤋
They will have a bankruptcy hearing you HAVE TO GO - you will be notified by the court the date and time. Go and present your case otherwise you can kiss that $$ goodbye! Seriously if you do not go you are not going to get any money!
2006-10-11 07:27:57 · answer #8 · answered by Anonymous · 0⤊ 0⤋
You have to go to court and fight it - but you need to consider the cost of fighting it and if it is only 2,000 might be easier to write off as a bad debt. I would compare the cost of an attorney and your time to the debt write off on your taxes.
2006-10-11 07:28:18 · answer #9 · answered by freemansfox 4 · 0⤊ 0⤋
wages and taxes are 1 and2 the line gets long so a cpa should straighten it out for you it sucks
2006-10-11 07:32:45 · answer #10 · answered by Anonymous · 0⤊ 0⤋