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What Should I Do If an Individual/Business Owes Me Money and Has Filed for Bankruptcy?

Since an increasing number of individuals and businesses are filing bankruptcy, it is not uncommon to receive a notice of bankruptcy filing from someone who owes you money or has property that you have an interest in. A “notice of bankruptcy filing” is simply a letter that advises you that the individual or business owing you money has filed for bankruptcy and explains how he/she or it intends on disposing of the debt owed.

Bankruptcy Petition

The court will send you the notice of bankruptcy filing; specificall or texty, the particular district of the United States Bankruptcy Court that is handling the debtor’s case. You will receive the notice of bankruptcy filing from the court on the debtor’s behalf – the individual or business who owes you money and has filed bankruptcy – if the debtor has listed you as a creditor in their bankruptcy filing. A creditor is the individual or business that the debtor owes money to. In some cases, a debtor will fail to list you as a creditor even though they should have done so. If you hear through the grapevine that a person or business owing you money has filed bankruptcy, you should contact a bankruptcy lawyer immediately to investigate on your behalf.

If you receive notice through the mail that someone or some entity owing you money has filed bankruptcy, you should contact a bankruptcy lawyer as soon as possible. This is especially important because bankruptcy cases have many set deadlines and are time-sensitive. Once you receive a notice of bankruptcy filing, you must also stop all efforts to collect the debt owed. This is because once a bankruptcy case is filed bankruptcy laws kick in to protect the debtor from payment demands from the creditor.

Just as every piece of mail, you shouldn’t just ignore a notice of bankruptcy filing. Instead, you should carefully read the document and save it for your records. If you receive a notice of bankruptcy filing and do nothing about it, you may lose your right to object to the debtor’s offer to pay less than what you’re rightfully owed. Also, ignoring a notice of bankruptcy filing can result in losing any interest you have in property that is in the debtor’s possession.

If you have received a notice of bankruptcy filing in the mail, or heard that an individual or business owing you money has filed bankruptcy, please click here to contact Attorney Theresa DeGray at Consumer Legal Services, LLC.