Creditors and Their Attorneys, Is This Really Necessary?
As an attorney, I’m required by my profession to answer with an emphatic “yes.” Bankruptcy is a very complicated area of the law with many forms and technicalities. But as a business owner, you have to weigh the cost of hiring an attorney against the likelihood that the attorney will be able to help you get any money out of the case. You may end up throwing good money after bad.
If the debtor is in a Chapter 7 case, and is claiming no assets, and you are not a secured creditor, there’s very little an attorney can do to help you.
However, if there are assets, or you suspect the debtor is being less-than-truthful in his disclosures, you should consider hiring an attorney to push the trustee to investigate further. In other words, if there are assets, or you are a secured creditor, absolutely hire an attorney to protect your interests and the interests of the secured property. An attorney can file a motion for relief from stay that will get you out of the bankruptcy case faster than waiting until discharge. An attorney can also represent you in dealing with the trustee to maximize your portion of the sale of assets.
In the Chapter 13 context, the calculus is similar. If your business is not a secured creditor, it is unlikely that you will realize any payment from the Plan. Check the Plan anyway with an attorney. With an attorney experienced in analyzing bankruptcy cases, you will see if unsecured creditors are truly left without recourse. If you are a secured creditor, it pays to have an attorney work with you to file the Proof of Claim. In many courts, a corporate entity can file their own Proof of Claim with the bankruptcy court. However, some courts require an attorney to file on behalf of the corporation.
Bottom line: It is best to consult with an attorney regardless of the circumstances. A good attorney will tell you when their services aren’t needed.