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Ask Terry L. Your Own Question
Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2832
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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If my business has an outstanding accounts receivable with

Resolved Question:

If my business has an outstanding accounts receivable with a business that may file bankruptcy, do I stand a better chance or do I receive any higher priority in collecting this receivable if I pursue a judgment against this business before it files bankruptcy?
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 6 years ago.
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Terry L. :

Hi and thank you for your question. In the future, you can request me to answer any further questions.

Terry L. :

Hard to say. If the business has no assets or receivables and you obtain judgment, then it may still be hard to collect.

Terry L. :

The instant they file bankruptcy the debt will be discharged.

Terry L. :

Also, preferential payments that are made to you (even by judgment) could be brought back to the bankruptcy estate and distributed to all creditors.

Terry L. :

So it is hard to say if you would have a higher likelihood of gettting paid.

Terry L. :

if you have a lien on an asset (Secured debt) then that security interest would remain even if they file bankruptcy.

Terry L. :

If the company does not file though, then you would be more likely to be paid if you have a judgment and they have assets.

Terry L. :

Suit would cost money and there could be costs of collection as well to enforce the judgment.

Terry L. :

I would exhaust all other payment options first.

Terry L. :

I would also not spend those receivables should you get them, just in case there is any preference issue brought up by the bankruptcy filing.

Terry L. :

Do you have any questions?

Customer :

No other questions. Thank you. You have been very helpful.

Terry L. :

Great. if you do, feel free to request me. THanks.

Terry L. and 3 other Bankruptcy Law Specialists are ready to help you