Can I Recoup My Losses if My Employer Files Bankruptcy and Owes Me Money?

Question from Bell, Can I Recoup My Losses if My Employer Files Bankruptcy and Owes Me Money?

Answer from AI:

When a company files for bankruptcy, it can be a stressful time for all involved, especially if you’re an employee who is owed money. The law provides certain protections and procedures for creditors, including employees, to try and recoup their losses. However, the specifics can vary depending on the type of bankruptcy filed and the company’s financial situation.

Priority of Claims in Bankruptcy

In a bankruptcy proceeding, not all creditors are treated equally. The Bankruptcy Code establishes a hierarchy of claims:

1. Secured creditors – These are creditors who have a lien on a property or asset.
2. Unsecured creditors with priority claims – This category includes some employee claims.
3. Unsecured creditors without priority – These are last in line and often receive little or no payment.

According to Section 507 of the Bankruptcy Code, up to $13,650 (as of April 1, 2019, and adjusted every three years) in wages, salaries, or commissions earned within 180 days before the bankruptcy filing or cessation of the debtor’s business, whichever occurs first, are given priority.

Steps to Recoup Your Losses

If your employer owes you money and is filing for bankruptcy, you may need to take the following steps:

1. File a Proof of Claim: This is a form used to submit your claim to the bankruptcy court and to the debtor. You’ll need to provide details about the debt, including the reason for the debt and the amount.
2. Attend the Meeting of Creditors: Also known as the 341 meeting, this is a meeting where creditors can ask the debtor questions about their finances and the reasons for bankruptcy.
3. Monitor the Bankruptcy Proceedings: Keep track of the bankruptcy case and any decisions made by the court.

Consult with a Legal Professional

Bankruptcy law can be complex, and the process can be challenging to navigate on your own. It’s recommended that you consult with a legal professional who can provide personalized advice based on your specific situation. They can help you understand your rights, guide you through the process, and represent your interests in the bankruptcy proceedings.

Remember, this information is a general guide and not legal advice. Laws can vary by state and individual circumstances can greatly affect the outcome. Always consult with a legal professional for advice tailored to your situation.