Collecting before any bankruptcy
Creditor rights start with the contract, the invoices, any guarantee, and any security interest the debtor granted. A secured creditor whose interest is properly perfected, for example through a UCC filing, usually stands ahead of unsecured creditors in the collateral, so confirming that the filing is accurate and current is an early step. Unsecured creditors generally need a court judgment before they can use enforcement tools such as restraining bank accounts, garnishing wages, or placing liens on property. A demand letter can resolve some matters, but its contents should be accurate and comply with debt collection rules where they apply. Watch for signs that the debtor is moving assets to relatives or new companies, since such transfers can sometimes be undone through a fraudulent transfer claim.
When the debtor files bankruptcy
Once a bankruptcy case is filed, the automatic stay generally requires creditors to stop collection efforts at once, including calls, lawsuits, and setoffs, and violations can lead to sanctions. In many cases the court sets a deadline to file a proof of claim, and missing it can mean losing the right to share in any distribution. Secured creditors may ask the court for relief from the stay or for adequate protection of their collateral. Creditors can also object to a plan, challenge the discharge of a particular debt in certain cases involving fraud, or serve on a creditors' committee in larger Chapter 11 cases. Suppliers who delivered goods close to the filing date may have priority or reclamation rights, which carry their own deadlines.
Defending payments you already received
Creditors are sometimes surprised to be sued after a bankruptcy over payments the debtor made to them before filing, on the theory that those payments favored them over other creditors. Defenses such as ordinary course of business or new value given after the payment may reduce or eliminate that exposure, and they depend on detailed payment history. Bring your contracts, invoices, payment records, any security documents, and all notices from the bankruptcy court. We confirm whether you are secured or unsecured, list the deadlines in the case, and decide whether to file a claim, seek stay relief, object to a plan, or negotiate directly with the debtor's counsel. Acting before deadlines pass usually preserves more of what is owed.
