The bankruptcy courts of the United States are empowered under Article 1 Section 8 of the US Constitution.   All bankruptcy cases are under the United States Federal Courts.  The fundamental purpose of bankruptcy is to give a fresh start or a way to reorganize existing financial circumstances.

What do I do when someone owes me or my company money and they file bankruptcy?

It depends on the type of debt that is owed to you.  Is your debt secured by some kind of collateral such as a real estate or something physical such as a ship or automobile?   Even if it is not a secured debt, there are provisions under the bankruptcy code which give priority to certain types of debt.

When you receive a notice from the Federal Court advising you a debtor to you has filed bankruptcy, it is very important you read the dates on the notice.  If you are able to file a "proof of claim" you have a very specific deadline to do so.  It also should list the first meeting of creditors otherwise known as the 341 meeting.

If the person who owes you money and filed bankruptcy does not have an attorney or used a form service, you have to be very alert to the debtor incorrectly listing your debt or even not including your debt.    As a creditor you have a right to attend the 341 meeting of creditors to ask initial questions of the debtor.

This is not to say that you can  use the 341 meeting to bludgeon a debtor or use the process to intimidate a debtor.   As a creditor you have the right to see the petition properly categorize the debt owed to you and to have a petition which properly discloses the obligations.

If there are issues which fall to your benefit, such as discrepancies in the petition, you are able to file a "adversary proceeding" which is a lawsuit within the bankruptcy to address those issues before a US Federal Bankruptcy Judge.

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