Blood From A Stone: Getting Payment From A Bankrupt Customer

There’s an old saying that “the juice has to be worth the squeeze.” In the case of whether or not you should pursue monies owed to you from a company that’s gone bankrupt, it’s a saying worth taking to heart.

Time is money. And if you’ve determined that it’s worth your time and effort to try and retrieve blood from a proverbial stone, then there are a number of things you’ll need to do when dealing with a bankrupt debtor:

Stop collection efforts

You’ll need to do this in compliance with the “automatic stay” order. Mark your debtor’s account as “filed for bankruptcy”, then decide whether or not you want to go to court to request a lifting of the stay.

Examine the bankruptcy papers

You might find something that other creditor’s missed, such as more money than the debtor is confessing to; property that they claim to own; items the debtor believes are safe from liquidation; the identity of other creditors. You may also know about assets not listed by the debtor.

Attend a meeting of creditors

This is an opportunity to ask the debtor questions pertaining to the debt that is owed to you, or indicate any suspicions you might have about hidden assets, underreported income, or over-reported expenses.

File a proof of claim

This is your declaration to the court that a debt is owed to you by the debtor. You’ll need to include evidence such as contracts, notes, etc. If you don’t file a proof of claim then you can lose your opportunity to receive monies from the bankruptcy proceeds.

Attend Chapter 11 or Chapter 13 hearings

If the debtor filed for Chapter 11 reorganization, you may choose to propose a reorganization (and repayment) plan, and then have an opportunity to vote on which proposed plan gets adopted. If Chapter 13 reorganization, the court decides whether the debtor’s proposed repayment plan should be confirmed, to which you can submit objections.

Active participation in the process works to your benefit. You will be more informed as to the debtor’s financial prospects and level of honesty. And it can be financially fruitful for you if hidden assets and/or monies are uncovered.


The Jayaram Law routinely and successfully assists its clients in their business-to-business (b2b) collection needs.  We take pride in obtaining payment on accounts receivables without fracturing critical business relationships or engaging in time-consuming and costly litigation efforts.


If you need business debt collection services conducted in a professional manner, contact our B2B (business-to-business) debt collection law firm by calling 312.454.2859 or visiting