MKB Juristen drafts custom legal documents
It is best not to cobble together or copy important contracts, terms and conditions, and other legal documents yourself. We help entrepreneurs on a budget with customized legal solutions, clear costs upfront, and practical explanations.
- Custom contracts, terms and conditions, and legal documents
- Budget-friendly and clear about the costs upfront
- Request a free consultation or a no-obligation quote
As a creditor, you can file for the bankruptcy of a defaulting customer — sometimes as a means of pressure to force payment. However, strict requirements apply: you need a lawyer, there must be at least two creditors and two debts (one of which is due), and the customer must genuinely not be paying. Below, you can read how a bankruptcy application works and what alternatives are available.
Filing for a customer's bankruptcy
If a customer defaults, you, as a creditor, can file for their bankruptcy. This is sometimes used as leverage within a debt collection process: the threat of bankruptcy can be a strong motivator to pay upfront.
The primary goal is to collect your claim. There is no guarantee of full payment, but there is a chance that (part of) the debt will be collected — depending on the assets available, the number of creditors, and who has priority. TODO_VERIFY: the 2022 bankruptcy figures mentioned in the original article are snapshots — check current figures if you are using them.
What requirements apply to a bankruptcy application?
The following applies, among other things, to filing for bankruptcy:
- you are required to engage an insolvency lawyer ;
- there must be at least two creditors and two debts, one of which is immediately due and payable (plurality of creditors);
- The customer actually does not have to pay (anymore).
If the conditions are met, a bankruptcy petition is filed and you are summoned to the hearing. The debtor may present a defense. The hearing is not open to the public; you appear together with your lawyer, whereas the debtor is not obliged to appear. Usually, the judge issues a ruling immediately, but sometimes it follows one to two weeks later.
Also consider alternatives
for bankruptcy is usually a last resort. First, determine if there are other solutions, such as an amicable settlement: you agree on a payment plan and give the customer time to settle their debts. If the customer fails to adhere to this, you can still file for bankruptcy.
Frequently Asked Questions
Can I file for my client's bankruptcy?
Yes, as a creditor you can do that, provided the requirements are met: at least two creditors and debts (one due), the customer does not pay, and you engage a lawyer.
Will I get my money back in the event of bankruptcy?
Not guaranteed. Whether and how much you receive depends on the assets available, the number of creditors, and the priority. Sometimes only a portion is collected.
Do I need a lawyer?
Yes. A lawyer is required for a bankruptcy application.
Is a bankruptcy petition a good debt collection tool?
The threat can prompt a defaulter to pay, but it is a drastic measure. Consider a debt collection process or an amicable settlement first.
Help with a bankruptcy application?
We have specialized knowledge of debt collection law and bankruptcy applications. Our lawyers advise on the best steps, prepare the application, and represent you in the proceedings.
View our options for debt collection and our expertise in insolvency law, or schedule a no-obligation intake consultation.
