What are my options if a home improvement company gave me a quote on a job and I paid half down but the work never started and now it is filing for Chapter 7?

.I paid them half down as was their policy. What can be done now?

Asked on May 26, 2015 under Bankruptcy Law, North Carolina


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

If this company has filed for bankruptcy, you are now considered to be a "creditor" of the bankrupt's estate. Accordingly, you can take no collection activity against the "debtor" (i.e. the home improvement company). What you will need to do is to file a "proof of claim" with the bankruptcy court (and be sure to act in a timely manner as deadlines for such filings are strictly enforced). After that, a meeting of creditors will be set. You can choose to attend or not (the meeting is held so that creditors may question the debtor if they choose to do so). At such point as the bankrutcy trustee makes distributions to the creditors, you may or may not receive a portion of what is owed to you. It will depend on just how many assets the debtor has, how many overall creditors there are, and how many of those creditors may have "secured" positions which will place their claims ahead of the claims of unsecured creditors (of which you are one).  

Bottom line, typically in a case such as this, you can expect to receive little, if any, of your downpayment. Depending on the ampunt of you money you paid, you may want to consult further with a bankruptcy attorney.

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