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Bankruptcy – First Things First!

Answered by: 

Question: 
What should we do when we receive a bankruptcy notice?
Answer: 

You have two primary obligations when you receive a bankruptcy notice. The first is to reduce the risk of an automatic stay violation. This can be done by a thorough coding of your core processor and lending origination system to designate that the account was included in bankruptcy and automatically stop any attempts to collect a debt. Just These attempts could include any number of automatically generated items such as delinquency notices, billing statements or even regular periodic statements that show a balance due. Additionally the account should be coded in such a way that both lending officers and frontline staff understand what they can, and cannot, do for the customer. The second thing you need to do is maximize the opportunity for recovery. This is done by reviewing all account transactions to see if there are any exceptions to discharge. Additionally, understanding the need to file a proof of claim or other affirmative action with a bankruptcy court will maximize your opportunity for recovery.

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Learn more about David Reed’s webinar

Bankruptcy Tune Up: 5 Things the Debtor’s Attorney Doesn’t Want You to Do

First published on 08/02/2020

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