It is an unfortunate consequence of doing business that at some point in time a customer, patient, or client will have an outstanding balance with you or your company, and will include that outstanding balance in a Bankruptcy filing. If your customer, patient, or client includes an outstanding balance in a Bankruptcy filing, you will receive written notice from the Bankruptcy Court and it is important that you take the necessary steps to avoid opening yourself up to potential claims.
Once a person files for Bankruptcy protection, the law imposes an “automatic stay” against collection activities and receipt of the notice of Bankruptcy filing prevents you from engaging in future collection activities. This means that upon receipt of that notice you are not able to send this customer, patient, or client to collections, start legal proceeding to collect the unpaid balance, or even send letters or billing statements seeking payment of the amount owed. Upon receipt of a notice of Bankruptcy filing you must immediately take steps to make sure that none of those activities proceed, otherwise you expose your business to potential liability for violating the “automatic stay” protections that are given to people filing for Bankruptcy. Even automatically generated, monthly billing statements that are sent to all customers, patients, or clients with outstanding balances must be stopped. Failure to do so can potentially expose your business to monetary damages.
If you have questions, please contact the attorneys at Thomas Law Group.