I am self-employed in Santa Clara county, California, and I provided services & received payments from a vendor who filed for bankruptcy. The trustee is asking for the return of monies received within 90 days of bankruptcy. Options?

I am self-employed in Santa Clara county, California, and I provided services to a major company that paid my company through a vendor management company. The vendor filed for bankruptcy. Now, the Trustee of the bankruptcy is asking me to return monies that I received within 90 days of the Chapter 13 filing date. What are my options?. The company I provided services for has taken the hands-off approach and would not do anything for me.

Asked on May 20, 2009 under Bankruptcy Law, California

Answers:

LAR, Member CA State Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

For the question in Santa Clara county, CA, you have to return the money. The bankruptcy laws specifically require that any money paid by a debtor to a "creditor" such as yourself within 90 days of the filing must be returned to the Trustee as a "preference."  All creditors to a bankruptcy filing must be treated equally and the law sees those creditors who receive such recent payments as advantaged. 

Make sure you file a "Proof of Claim" with the bankruptcy court for the amount that is owed to you. If you need specific assistance, you can find a bankruptcy attorney in Santa Clara county, California to help you by checking out the listings in the AttorneyPages directory.


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