What Does A Bankruptcy Notice Mean To Me?

05/27/2011
By Lance Portman

The mail arrives and instead of a check in payment of your well aged receivable, it is a bankruptcy notice concerning someone who owes you money.

While the temptation may be to toss it in the wastebasket, don't, as this notice contains important information and often will be the only information you ever receive from the bankruptcy court.

This notice will set forth the Court where the bankruptcy was filed, case number, the date of the filing, the type of bankruptcy (e.g. Chapter 7, 11 or 13), the name and contact information for the debtor and the trustee. Pay particular attention to the exact name of the party filing bankruptcy. Sometimes the party filing the bankruptcy is not the exact same party who owes you money.

The bankruptcy notice also sets forth certain important dates such as the date, time and location for the Meeting of Creditors before the Trustee. The debtor and his attorney will appear at the meeting and you will be given the opportunity to seek information from the debtor.

If the bankruptcy case is a Chapter 13 the notice will set forth a deadline for filing a Proof of Claim. You must file a Proof of Claim by that deadline in order to receive any payment on your claim.

Under certain circumstances the debtor may not be entitled to discharge (legally wipe out) their debt owed to you. Those limited circumstances are expressly set forth in the Bankruptcy Code, and include such things as actual fraud and breach of fiduciary duty. Importantly, the bankruptcy notice sets forth a deadline by which you must assert such a claim by the filing of an adversary proceeding complaint with the bankruptcy court. This deadline can be very, very short and often is within sixty (60) days of the date set for the initial meeting of creditors.

A bankruptcy fundamentally changes your rights. Don't just toss that bankruptcy notice but look it over. To find out what your rights are you should contact attorneys who look out for the interests of creditors in bankruptcy cases.