Customer filed bankruptcy

Discussion in 'Business Operations' started by bohiaa, Jul 26, 2008.

  1. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    Hay All:

    We bill monthly, frome time to time a customer or two gets behind, you know how it is, anyway I had 2 that I was worried about and sure enoulf, there gonna screw me, I informed them if payment is not made by XX,XX, XXXX the account would be turned over to our collections dept.

    the one lady called and said she filed for bankrucpy and would I wait untill August and she will pay, or start making payments, "it's only 200.00"

    I told her to fax over a copy of the final "submitted" fileing and we would go from there, well she did. I know the laws have changed on the bankruptcy thing a few years back.

    But Just wondering, why I was NOT listed as one of here debtors?

    anyone have any experance with this ?

  2. howierd3866

    howierd3866 LawnSite Senior Member
    Messages: 348

    not too up to date late imfor. I know is if you are not listed she did not claim you and will have to paid you. But only if you agree to her terms as in payments.
  3. lawnman_scott

    lawnman_scott LawnSite Fanatic
    Messages: 7,547

    She isnt screwing you otherwise you would have been on the list.
  4. LushGreenLawn

    LushGreenLawn LawnSite Silver Member
    Messages: 2,120

    No, if she does not include you on the list, you persue collections as normal, not on her terms.

    BTW have you been drinking?:drinkup:
  5. Roger

    Roger LawnSite Fanatic
    Messages: 5,943

    I had a customer a couple of years ago file for bankruptcy. I checked with a couple of accountant friends on what to do. My outstanding balance was about $450. He said that this amount was far too small to be considered for the creditor list. The list is usually made up of those holding the mortgage, car loan, credit card issuers, and others who have a high balance due them. The creditors learn what is outstanding, what assets are available, and determine how much they will settle. They form a committee of sorts, and agree on some plan.

    If I was on the creditor list, then I would be on the committee and have some say on what percentage of my outstanding balance might be paid off with the available assets, or through a reorganization. By staying clear of the list, I was "on my own," so to speak, hoping to get the full balance paid off in due time. The accountant told me that when a judge approves a plan or liquidation, or reorganization, some money is set aside not designed to the official creditors. Out of this pool, some money may be available to pay my outstanding balance.

    Now, this may not be the case for every bankruptcy. I can only share my experience, and it may/may not be applicable in your case.

    I took this advice and information, and sat back, taking no action. I have no idea what happened with regard to the bankruptcy, and the creditors on the list. The customer did make contact and said that they would pay the full balance "as best they could, when they could." What choice did I have?

    Their house was soon vacant. Much later, a For Sale sign appeared, and it sold to another party. Meanwhile, my customer is now gone from the area. However, in a few months, I got a check in the mail from a new out-of-state address. It was about 20% of the balance, with a note saying that they would do their best to pay off the full amount. Over the next year (maybe even a bit longer), I got periodic payments, until the full amount was paid. Contrary to my expectations, they were good to their word. To be sure, the timeliness was less than hoped for, but they could have skipped out, and I would have never known where to find them.

    Somebody suggested you should not agree to their terms of payment, only yours. I'm sure every case is different. But, if there is no money to pay on your terms, you had best accept what you can get. The alternative is being ignored, and get nothing.
  6. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    Thanks for the reply, this woman doesn't own a home she rents, she said that she would try to get me paid, she was begging me NOT to turn it in to collections, I told her we would wait and see waht happens, as far as her paying,

    to be honest 200.00 is a small amount and having family members in this same sit, I feel for her, but on the other hand she's 2 months behind and a simple phone call would have made it better, in fact, I'm the type to do free work, I jsut get bent when people out right try to put the screws to me..

    Thanks again

    HOOLIE LawnSite Gold Member
    Messages: 3,981

    If she's offering to set up a payment plan, then just go with it. What other choice do you have really? She's not going to pay in full at this time it sounds like.

    That's a bit backwards....she's filing bankruptcy yet is worried about having an account in collections...
  8. PTP

    PTP LawnSite Bronze Member
    from Tulsa
    Messages: 1,398

    My advice would be to not even talk to people who can't afford your service. And certainly don't service their lawn.:)
  9. howierd3866

    howierd3866 LawnSite Senior Member
    Messages: 348

    man I knew once I sign up here I would learn something that would be helpful. Please tell me how I would tell if people could afford to pay us. Is there a book to buy.
  10. Roger

    Roger LawnSite Fanatic
    Messages: 5,943

    ... echoing 3866's question, ... Why would anybody take a new customer if we knew they couldn't afford to pay?

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