The commercial debt collection attorneys of Klapper & Fass represent commercial creditors including banks, Fortune 500 companies, and large and medium-sized companies in the textile, construction, transportation and credit industries. In addition to our commercial collection cases, our New York commercial law attorneys also enforce creditors' rights in all types of workouts, commercial foreclosures, , promissory note and guaranty actions. We employ skillful negotiation and aggressive litigation as appropriate to the circumstances.Creditors' Rights During Bankruptcy
The expense of collecting debts can make it difficult for many businesses to recover money that they are owed and need to keep growing. Unfortunately, many debtors declare bankruptcy, use fraud or other illegal tactics to avoid paying their debts, leaving creditors unable to recover. Our firm ensures our clients' rights as creditors are protected.
When a debtor files for bankruptcy an automatic "stay" or stop goes into effect. The automatic stay prevents creditors from pursuing collections. This means that creditors may not write letters, make phone calls or file suit to collect an outstanding debt. They may not even enforce or execute on judgments that were obtained before the bankruptcy case was filed. Once the creditor is notified that a bankruptcy case has been filed, it must stop any collection efforts. Meanwhile, an estate of the debtor's property is created for the benefit of creditors, and all non-exempt property becomes the estate's property. This means that even a secured creditor is stopped from conducting a sale of a debtor's property even if it was secured by security agreement and perfected by a UCC-1 filing.
An automatic stay is in effect until a debtor receives a discharge of debt towards the conclusion of the bankruptcy proceedings. At that point, the stay is replaced with an injunction preventing creditors from pursuing collections of any of the discharged debts.
Although the outlook may seem bleak when a debtor declares bankruptcy, there are several different methods that can be used to challenge the automatic stay and resume collections. These methods include filing adversarial proceedings as part of the pending bankruptcy to challenge fraudulent or illegal transfers of the debtor’s assets and moving to lift the automatic stay with regard to the creditor, especially where the creditor is secured creditor with regard to assets of the debtor. If the creditor has information that the debtor has been destroying records an secreting assets the entire bankruptcy can be challenged on fraud grounds.
In a motion to lift the stay a creditor bears the burden of showing cause to lift the stay. For example, a bank may be worried that the value of their collateral will decrease during bankruptcy. The bank may be permitted to modify the stay in order to initiate foreclosure or obtain adequate protection.
In certain cases, a creditor may wish to file a motion to obtain approval for a setoff of mutual debts. This means that when two parties owe each other a debt from mutual business activities, one party takes a setoff against the other, rather than each party paying the full sum owed.Retain an Experienced Commercial Debt Collection Attorney
The New York commercial debt collection attorneys at Klapper & Fass can enforce your creditors' rights. We are not daunted by cases of first impression, involving novel issues of law. We use effective advocacy, negotiation, and excellent research skills to craft appropriate strategies to collect our clients' debts and enforce their rights. We maintain offices in White Plains and Manhattan and serve the five boroughs of New York City as well as the surrounding counties of Suffolk, Westchester, Rockland, and Nassau. We also provide legal services in Texas, California and other states with large manufacturing sectors. Contact us at 914.287.6466 or via our online form.