I Received a Notice of Bankruptcy in Florida – Now What?

Often, the first contact that most creditors have with the Florida bankruptcy process is when they receive a notice of bankruptcy in the mail.

After reading the notice, the first two thoughts tend to be, “How did I get this?” and “What do I do now.”

How Did I Get This Notice Of Bankruptcy?

In March 2014 alone, there were almost 32,000 bankruptcy petitions filed in the Southern District of Florida. This included almost 900 business filings and about 31,000 non-business filings. As these numbers indicate, it may be only a matter of time before you receive a notice of bankruptcy from a person or business who owes you money.

Once an individual or business files for bankruptcy, the bankruptcy court in the district where the case was filed issues a notice to all creditors listed on the debtor’s bankruptcy petition, advising them of the debtor’s bankruptcy filing.

In the bankruptcy setting, a business or individual becomes identified as a creditor because either:

– The business or individual is someone to whom the debtor owes money or who claims to be owed money by the debtor; or

– The business or individual was listed in the debtor’s bankruptcy case as someone to whom the debtor owes money or might owe money.

If the debtor identifies you as a creditor, you will receive the notice of the debtor’s bankruptcy filing.

What Do I Do Now That I Am A Creditor In A Bankruptcy?

1. Do Not Contact The Debtor To Collect On Your Debt

There are several things a creditor in a bankruptcy case can or should do, but one of the most important things is what a creditor should not do. A creditor may not call, write, email, fax, file a lawsuit, or otherwise contact or pursue the debtor about any debt that was owed on or before the date of the debtor’s bankruptcy filing.

The debtor’s filing for bankruptcy relief of any kind causes an “automatic stay” to go into effect. It does not matter whether the debtor filed for chapter 7, 11, 12, or 13 relief; the automatic stay prohibits any and all collection efforts against the debtor.

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It is very important to respect the automatic stay, as violation of it can result in serious consequences. At a minimum, any actions taken in violation of the automatic stay can be invalidated (including repossession or foreclosure actions). Creditors can also be held liable for any damages experienced by the debtor, including bankruptcy attorneys’ fees and costs, and possible damages for emotional distress, depending on the nature of the violation.

However, it may be possible to pursue others who are liable on the debt, such as co-signers or guarantors, depending on the circumstances. (Caution: because a co-debtor stay, similar to the automatic stay, can apply in some cases, it is important to contact a bankruptcy attorney West Palm Beach before proceeding against co-debtors, co-signers, and guarantors.)

2. Protect Yourself From Further Loss

While you cannot take any actions against the debtor to recover for prior debts, you can take actions to prevent being owed any more by the debtor. For businesses, this may include taking steps such as:

– Arranging for any goods in transit to be pulled back;

– Sending a UCC reclamation notice under certain circumstances; or

– Determining whether any payment has been received within 90 days prior to the debtor’s bankruptcy filing, in anticipation of a potential preference claim (claw back) by the debtor.

3. Contact A Bankruptcy Attorney

Bankruptcy law is a unique area of law, with its own rules and procedures. An experienced West Palm Beach bankruptcy Lawyer will know the ins and outs of the bankruptcy court workings, will be familiar with the restricted timelines available for action, and can make sure your rights are fully protected and that you receive the maximum distribution available under the bankruptcy laws.

A bankruptcy attorney can do several things to ensure that you are paid as much as possible for your claim, including:

– Represent your interest at the section 341 meeting of creditors;

– File a proof of claim with the bankruptcy court;

– Work with the debtor’s attorney or court appointed trustee to determine how the debt owed to you will be handled in the bankruptcy proceeding payouts;

– Advocate for your interests as the debtor’s bankruptcy case proceeds through bankruptcy court; and

– Seek a lifting of the automatic stay to allow your state or federal court actions to continue, if appropriate under the circumstances.

Best West Palm Beach Bankruptcy Attorneys For Your Help

If you have received a notice of a debtor’s bankruptcy filing, we can help. The knowledgeable Florida bankruptcy lawyers at the Law Office of Kelley & Fulton, P.L. have over 25 years of bankruptcy experience in the West Palm Beach, Boca Raton, Delray Beach, Jupiter, Boynton Beach, Palm Beach Gardens and Wellington areas. Call us today at (561) 491-1200.

Resource :

http://www.flsb.uscourts.gov/?page_id=3779

http://www.floridabankruptcy.com/wp-content/themes/millerandhollander/pdfs/what_happen_next11.pdf

http://www.jaxlegal.com/personal-bankruptcy-lawyers-jacksonville/

https://www.avvo.com/legal-answers/notice-of-deadline-to-file-proof-of-claim-chapter–2334621.html