Declaring bankruptcy is rarely easy for anyone who must go through it, given how long and complicated it can be. This is especially true for businesses, which have complex holdings that can become tied up in bankruptcy for years. For anyone who has an interest in the assets of a bankrupt business or person, bankruptcy can represent a potential asset recovery nightmare.
What Is Bankruptcy?
Bankruptcy is the process by which a person or business dealing with overwhelming debt can have that debt discharged. An important part of the bankruptcy process is the protection that it provides to people suffering from extreme debt. Due to something known as the "automatic stay," collecting debts or seizing assets from bankrupts is extremely difficult.
What Is the Automatic Stay?
The automatic stay is a court order that is issued whenever a person or business declares bankruptcy. It automatically freezes any ongoing attempts to repossess or seize assets from that person or business (known as the declarant), including all eviction or foreclosure proceedings. Once the automatic stay is in effect, no part of the debtor's property can be sold or transferred without the express permission of the court. For obvious reasons, this is inconvenient for anyone who was counting on payment, or at least the ability to seize or repossess a declarant's property for non-payment.
How Bankruptcy Affects People's Assets
Once the automatic stay goes into effect, it can become nearly impossible for someone to get access to the assets of the debtor. This means that any money or property you would otherwise be entitled to because of dealings with the debtor are now locked away, stuck behind the protection of the bankruptcy court until the court authorizes its transfer. In addition, whatever arrangement the debtor, its trustee, and the bankruptcy court devise to settle the bankrupt's debts will determine what you are entitled to and when.
Why You May Need Asset Recovery Services After a Bankruptcy
Due to everything previously mentioned, it can be easy for assets to get lost in the mess of bureaucracy that is involved in bankruptcy. It is easy for property to be lost, for important paperwork to be misplaced, or for records to get shuffled around. Add in potential complications that can occur during the years-long process, and you have a recipe for confusion and chaos that can make assets simply hard to identify. That is why you may need an asset recovery lawyer to help you deal with the aftermath of a bankruptcy.
Did a Bankruptcy Cost You Money You Never Recovered?
With billions of dollars in unclaimed assets sitting in state abandoned property funds and bankruptcy courts, you potentially have a great deal to gain. Call our Cooperstown office at 607-547-1195 to discuss your situation.
