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How to Collect Business Debt
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Article 8: Your Rights During Bankruptcy
While you can’t push for debt collection yourself or through lawyers or collection agencies once the deadbeat has filed for bankruptcy, you can go after him in court—if the debt is large enough or you are angry enough not to care about expense.
“We’re talking thousands and thousands in costs here,” says Darrell Cook of Darrell W. Cook & Associates in Dallas. “If you had a $10,000 debt it wouldn’t be worth it.”
Still, you could take one of these actions:
- File a Proof of Claim. Simple and inexpensive, the Proof of Claim alerts the court that you have either a secured or unsecured interest in the outcome.
- Object to the debtor’s position. The trustee verifies if your claim is valid.
- Sue the debtor inside the bankruptcy.
- Ask the court for a Lift of Stay. This allows continuance of a suit filed against the debtor before the bankruptcy was filed. Permission is often granted.
- Join in a creditors’ meeting. Your attorney can query the debtor about such matters as the location of the purchased merchandise.
- Join other unsecured creditors. Hire one lawyer to represent a number of unsecured creditors, which saves on attorney’s fees and gives the group a larger voice than any would have alone.
You’ll at least want to file a Proof of Claim. But since pursuing personal justice soon becomes prohibitively expensive for the average micro-business, you can probably kiss the full debt goodbye.
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