Finding Out About a Customer's Bankruptcy
Q: I heard through a third party that my customer filed bankruptcy but I have never received official notification. Is there anything I should do to protect my interests?
A: If you find out about a bankruptcy in any way before the deadline to file a claim, you will be treated as if you had been officially notified. If you fail to take affirmative action by filing a Proof of Claim with the bankruptcy court, you will lose your right to assert a claim in the bankruptcy case and the debt will be discharged. A discharged debt leaves you no recourse to collect from your customer anytime in the future. In some instances, however, it may not be worth your while to assert a claim. If the bankrupt party has no assets from which payment can be made-a no asset case-then the result will be the same. Your debt will be discharged. Depending on the amount owed, it may be prudent to consult with a bankruptcy expert who can determine whether the debtor has assets before going through the expense of filing a claim.
