Off Topic - Bankruptcy Notice

[geekgirldany]

Today I received a letter from a lawyer. This is for a non accounting/tax client. Says it is a notice of chapter 11 bankruptcy. Lists client name, judge, attorney, and various deadlines. There is then a form attached called proof of claim.

Now I have never seen this before. Client does owe me money and hasn't paid. So I am guessing this is legit. I mean is this how creditors are usually notified about a bankruptcy?

I am also guessing I won't be getting any money.

[rfk]

Could be that...

you were undoubtedly listed as a creditor, so this is what is going on?

rfk

[taxjungle]

Warning!!!

I was served a bankruptcy notice years ago from one of my tax clients. Here is what happened! She asked me to make a list of all her creditors with all Creditors' names, acct numbers, addresses, amounts $$, etc. Then she brought in 4 grocery sacks stuffed with random invoices from all her creditors. It took me an entire week on a banquet table to sort out everything in the format her attorney wanted. I billed her $800 & that was greatly discounted!

Now the Warning is: Her attorney added me to the creditor list, and I never and was not allowed to get paid, even though I did all the work.!!!

This happened even though I had her sign an Agreement that she would not add me to her creditors' list. I LEARNED MY LESSON THE HARD WAY. I DO NOT WORK FOR CLIENTS GOING THROUGH THE BANKRUPTSY PROCESS. In fact, that is one of my Interview Questions I try to remember to ask each year a client comes in.

I hope this helps a little. Hoping you the best with this client.

[S T]

Agree

I had a similar issue several, as in more than many years ago, obviously I didn't get paid, and the client is no longer my client.

Then I had another client this last 6 months file, and I wasn't included. He is makin payments monthly.

Sandy

[geekgirldany]

thank you all for responding. I have just never been listed as a creditor before. Very new for me.

I'll just say it is computer related and not anything related to accounting or taxes. Very disappointed as I have done work with this company for over 6 years.

That is a great question to remember to ask on bankruptcy. I've had several that have had to get their tax returns done due to bankruptcy... I've always got payment up front in full.

[taxjungle]

Bankruptcy

I quess that could be another way to deal with bankruptcy clients and that is to get paid up front before any work is done. Remember, some clients don't tell us they're filing/filed for bankruptcy, so that is the reason I include that question on my Additional Interview Questions Sheet.

[JG EA]

I did get one a few years ago and figured I wouldn't be paid. But after it all was over the client did pay me!.

[Lion]

Paid

Someone once told me to have the bankruptcy lawyer hire me to prepare the tax returns or work on the accounting or whatever instead of the client filing for bankruptcy being my client. I guess the lawyer gets paid for his work and expenses no matter what and can pay me as his subcontractor.

Have a big client that had three of his clients go through bankruptcy within a year or so. One had actually ceased being his client and was paid in full, he just ended up on the list for some reason so still getting lots of mailings. One was down to paying for the last two weeks out of a year contract, so not a big loss in the scheme of things. The last just had a month's project so must've known he was filing when he signed the contract; nothing's been paid from that one. Seems to be a sign of the times. I guess I better start asking clients, too.

[S T]

Fees

I think we are back to advance payment on accounting, payroll an other services that we render, instead of the back end.

Linda, as you stated in your post, sign of the times

I plan to prebill everyone of my small business clients now, haven't had as musch issue with my peronsal tax client returns - only one boucned check this tax season I do however have some slow pays - but even those are moving forward

Sandy

[tpnl]

Notified by Court

The lawyer sent you notification? You should be notified by the court also. That is how I have always been notified.

[JON]

Chapter 11

means this is starting out as a reorganization. Everybody who shows proof of being owed money gets listed. Your client must have some assets and/or is employed ..The judge listens to what the your client can pay and reviews the facts. He decides how much can be paid now and monthly in the furture. Usually you get some % of the total - if you are an unsecured creditor it is probably paid over 1-5 years montly.

I you are hired by the trustee to do work for the client - you get paid for that by the trustee from funds he collects. I have never lost money working for a trustee. If you are hired by a client tell him to have the trustee contact you.

[gkaiseril]

And was the attorney listed as a creditor?

NO!

Why not?

He does not bill the client until the case is settled. And he then has a number of years to collect his/her fee because the individual can not file for another bankruptcy for a number of years.

You might want to follow that practice, charge a small or no retainer with a notice that the balance will be billed after the final settlement so you can accumulate all of your time and expenses in helping the client. Or bill the attorney for your time and expense in doing his work.

[sdiazea]

"He does not bill the client until the case is settled"

Not so! Every bankruptcy lawyer I've ever seen gets their money up front. No money! No startee bankruptcy! As additional expenses occur thay have to be paid to proceed.

And was the attorney listed as a creditor?

NO!

Why not?

He does not bill the client until the case is settled. And he then has a number of years to collect his/her fee because the individual can not file for another bankruptcy for a number of years.

You might want to follow that practice, charge a small or no retainer with a notice that the balance will be billed after the final settlement so you can accumulate all of your time and expenses in helping the client. Or bill the attorney for your time and expense in doing his work.

[luke]

client added me

years ago to her bankruptcy - CHEATED me out of $600 (after she agreed that she wouldnt) - then came BACK TO ME the next year to prepare her taxes! I told her she still owed me $600 and she commented that the $600 was "written off"

[newbie]

Don't you just love those write off's

It irritates the heck out of me when I hear that - just buy it, it's a write off, like you're getting something for free.

Like they'd give a day of work and not expect their employer to pay them!