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Final Chapter

Chapter 7, Chapter 11-your customer's gone bankrupt? Here's what to do.

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This story appears in the April 2000 issue of Entrepreneur. Subscribe »

It's the every business owner dreads: Acustomer that owes you money has filed for . Before youstart to panic, here's the lowdown on what to do and whatfallout you can expect:

First, stop all collection activities. "The automatic stay[essentially a federal injunction that prohibits collection effortswhile the case is pending] descends like an iron curtain andoperates as an absolute bar on further collection activities,"says David Gamache, an attorney at Newman, Freyman, Klein &Gamache PC in . "If the matter has been placed forcollection, the attorney or agency should be notified immediatelyby telephone and with a follow-up copy of the bankruptcynotice."

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