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If you were doing business with another party, and you owe

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them money and as a...
If you were doing business with another party, and you owe them money and as a result they have to file for bankruptcy, can their trustee come after you for the money they claim you owe them? how would this process work? couldn't anyone having to claim bankruptcy then claim someone else owes them money?
Submitted: 4 years ago.Category: Bankruptcy Law
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1/1/2013
Bankruptcy Lawyer: cfortunato, Attorney replied 4 years ago
cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8,023
Experience: Bankruptcy professor.
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cfortunato :

Hi - my name is XXXXX XXXXX I'm a Bankruptcy attorney here to assist you.

cfortunato :

If you owe someone money, and that person files a Bankruptcy, the Bankruptcy court acquires the right to collect the money that is owed.

cfortunato :

The Bankruptcy court will be able to attempt to collect the money in the same manner as the person to whom the money is owed - by attaching valuable assets, and by garnishing bank accounts and wages.

cfortunato :

I think this is what you wanted to know. If not, please let me know.

cfortunato :

Thank you.

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Customer reply replied 4 years ago
how would they prove that there is money owed?
Bankruptcy Lawyer: cfortunato, Attorney replied 4 years ago
Is there something in writing to show the money is owed?
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Customer reply replied 4 years ago
and what if there was an agreement made? for example, the agreement stated that money owed was $5000, but when the party goes to file for bankruptcy, they are claiming you owe them $50000? my question is how would they prove what if anything you owe them?
Bankruptcy Lawyer: cfortunato, Attorney replied 4 years ago
Is the agreement in writing, or was it an oral agreement?
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Customer reply replied 4 years ago
the agreement is in writing, along with a release signed stating there are no other claims except for the money owed
Bankruptcy Lawyer: cfortunato, Attorney replied 4 years ago
Thank you for your response.

The claim for the amount owed can only be for the amount reflected on the written agreement. If the agreement says you owe $5,000, the a court will not approve a claim for $50,000.
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Customer reply replied 4 years ago
ok, but my original question still hasn't been answered. what if there was no agreement, and the person just says that all of their debts owed are because you owe them money? can't anyone just blame their debts and needing to file for bankruptcy on someone else then if no proof is required?
Bankruptcy Lawyer: cfortunato, Attorney replied 4 years ago
If there is no written agreement, then it will not be possible to collect the money - unless the person who supposedly owes the money admits that the money is owed.
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Customer reply replied 4 years ago
so then their bankruptcy trustee would not try to collect? I'm assuming there would have to be some proof of them trying to collect the money from you (like a lawsuit) brought about before they file for bankruptcy?
Bankruptcy Lawyer: cfortunato, Attorney replied 4 years ago
Yes - if there is no written agreement to prove the money is owed, and if the person who owes the money does not admit to owing the money, then the Bankruptcy trustee cannot even try to collect the money.
The fact that a lawsuit was filed before a Bankruptcy is filed is not proof that the money is owed. (Filing a lawsuit and then getting a judgment would be proof that the money is owed, and the trustee would be able to attempt to collect the judgment amount, but simply filing a lawsuit alone would not be proof that the money is owed.)
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Customer reply replied 4 years ago
ok, thanks. what about if they try to file a lawsuit while they declare bankruptcy? is that acceptable?
Bankruptcy Lawyer: cfortunato, Attorney replied 4 years ago

Once the party (to whom the money is owed) files a Bankruptcy, the trustee will have the right to collect any judgment based on such a lawsuit. This means the trustee would also have to file such a lawsuit - which the trustee is unlikely to do if there is no written proof (agreement) that the money is owed.

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