Resources for Creditors Following a Customer's Bankruptcy Filing
TIADA's Compliance Consultation Service frequently receives questions from dealers regarding their options when a customer files for bankruptcy protection. The good news is that the bankruptcy courts provide a wealth of information on their websites, free of charge. A sample of those resources is discussed below.
Proof of Claim Form
When someone who owes you money files for bankruptcy, the bankruptcy court sends a Notice of Meeting of Creditors. In order to participate, creditors must submit a Proof of Claim to the trustee. The Proof of Claim Form, Official Court Form B410, is available on the court's website, and can even be filed electronically. Visit the court's website, under the Forms heading, for details.
Lift Stay Motion
The automatic stay prevents secured creditors from doing anything to collect a debt from a person who filed for bankruptcy. This stay is in place for 60 days, in the case of a Chapter 7 filing, and for the duration of the case in a Chapter 13 filing. A creditor cannot attempt to collect on a debt unless the bankruptcy court grants permission, or lifts the automatic stay. If a customer fails to maintain insurance on a vehicle as required by the retail installment contract, then the car creditor may file a lift stay motion. This motion, if granted, allows the creditor to exercise all remedies available under the contract for instances of customer default.
Knowing how to contact the bankruptcy court trustee is critical to secured creditors. If you cannot locate the trustee's name on the notice of filing, you can Google the court (ex., Bankruptcy Court Western District of Texas) and click on the General Information tab. Scroll down to Trustee Offices.
The important thing to note is that the court clerks will not give much, if any, information over the phone. Because the bankruptcy courts have provided so much information on their websites, the staff members answering the phones will likely direct callers there. Do not overlook the bankruptcy filing and the notice of creditor meeting themselves. Those documents include the type of bankruptcy filed; the court in which the case will be heard; the date the case was filed; the deadline in which to file a proof of claim; the time, date, and place of the first meeting of creditors; and the rules for collecting what's owed to you. After reviewing the bankruptcy documents you receive, and spending some time on the bankruptcy court website, you will likely have a firm grasp of what's going on. If you still have questions, a bankruptcy attorney can help. Contact TIADA for a referral.