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Protect your company if someone wants to discharge a debt

| Dec 6, 2019 | Creditors' Rights |

If you work for a company that either extends credit or provides goods and services, you rely on the timely payments from those indebted to you to continue operating. When people try to avoid their financial obligations to repay your company, it can hurt your bottom line.

Attempts to collect on unpaid, outstanding amounts can eventually push the person who owes you money to file for Chapter 7 bankruptcy. If the debt in question is an unsecured debt, such as a credit card or medical debt, you might think that you have no choice but to give up on ever getting your hands on those funds. However, you can and arguably should still fight for repayment from those who owe you money.

The meeting of creditors lets you make your claim

The potential to abuse bankruptcy is very real, which is one of the reasons why the federal government has strict income and asset limitations filings. That way, people can’t just rack up consumer debt and try to issue personal responsibility. Even if someone qualifies for Chapter 7 proceedings, you may still be able to argue that they shouldn’t get to discharge your debt.

During the 341 meeting, creditors for the person filing for discharge have the right to have their case heard by the court. You could claim that you deserve a portion of the seized assets or that the debt should not be eligible for discharge.

If you can convince the trustee overseeing the meeting to include you among those who should receive liquidated assets or exclude the debt from discharge, you can still pursue the funds owed to your company regardless of a Chapter 7 discharge.

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