QuickTip. Staying out of hot water as a creditor in bankruptcy

PRE-FILING

• Require COD or advance payment or retainers for client projects. • Keep open communications with your customers about their ability to pay. Terminate service as far in advance of filing as possible if they get too far behind on payments.

POST-FILING

• Call a lawyer immediately. Set up a consult, which is usually free, and assess your options.

• Cease all collection activity.

• Consider setting aside any of the debtor's "past due" payments received within 90 days of their filing.

• If you are a party to an executory contract, continue to perform until advised otherwise by counsel.

• File your "Proof of Claim", the document that proves that the debtor owes you money. If you don't file timely, you will be barred from collecting what's owed to you.

• Legal representation can cost $10,000+ for creditors. To save on legal fees, consider teaming up with one or more other creditors to retain counsel jointly.
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