Bankruptcy filing

If you have a claim against your counterparty, there are several ways to collect it. For example, this can be done through a summary proceedings, but this requires an urgent interest. Another way is through a proceedings on the merits to start. This usually takes a little longer. Finally, there is the option of filing for the debtor's bankruptcy. This article explains when filing for bankruptcy is an appropriate collection tool.

Filing for bankruptcy as a means of collection

If the other party's debts continue to mount or if you already know that the debtor will not be able to pay when you receive a positive judgment gets, then you can consider filing for bankruptcy of your counterparty. In addition, it can be an appropriate means of collection if the other party can, but does not want to pay, and hides its assets. These are then no longer susceptible to prejudgment attachment. Whether filing for bankruptcy is an appropriate remedy in your case may be apparent from a redress investigation that can be done for determining process strategy.

Pros and cons of filing for bankruptcy

There are both advantages and disadvantages to filing for bankruptcy. The party whose bankruptcy is filed will usually go to great lengths to avoid it. Under pressure from the filing, payment can then be made, or a settlement reached. If this does not happen and bankruptcy is declared, the trustee takes over the management of the bankrupt estate. The trustee then has various means to find, manage and sell the bankrupt's assets so that creditors can then be satisfied. One disadvantage of filing for bankruptcy is that the consequences are quite final. Another disadvantage is that the proceeds must be divided between the various creditors. The trustee, holders of a lien or mortgage take precedence, however.

Requirements when filing for bankruptcy

Filing for bankruptcy of a debtor always requires an attorney. In addition, it is required to prove at the hearing that there are multiple creditors. Want to know if filing for bankruptcy is an appropriate remedy in your case? Then contact the debt collection lawyer at Lexys Lawyers.