Live Chat
During This Challenging Time

We are open for business and remain dedicated to your case! All those working on-site and remotely are still available to answer your questions. The well-being of our clients and staff are vital, so we will provide updates as the situation progresses.

During This Challenging Time Close

What Happens If Your Employer Declares Bankruptcy?

January 12, 2013

If you’ve purchased a home with a mortgage or an automobile with a car loan, you know you’re a debtor. But did you know that you’re probably a creditor, too? If you keep money in a bank, own a retirement account, or simply have a job, you’re a creditor.


Just like your lenders are concerned about your ability and willingness to make payments on your home loan and car note, you should probably be mindful of the creditor risks you face, too. Do you know what would happen if your employer files for bankruptcy?


Most employees don’t think of themselves as creditors of their employer, but that’s what they are. Salaries, stock options, retirement accounts and pensions, and health insurance benefits are all promises that a firm is obliged to honor. In the case of bankruptcy, these valuable promises due to you may be put into jeopardy. You’ll need to take action.


First, in most situations, you’ll need to file a proof of claim listing the obligations your debtor-employer owes you. A proof of claim gives the debtor, the bankruptcy court, and other creditors notice that you expect to be paid.


Second, you may need to move quickly. Employees who sit on their rights may lose their benefits. Failing to file a proof of claim within the statutorily prescribed time frame may put your rights at jeopardy.


Finally, you may need to fight for your rights. Depending on the financial state of the firm, other creditors may have more highly prioritized claims than yours. If this is the case in your employer’s bankruptcy, you may face the prospect of a court-imposed discount, also known as a haircut, which may include lost compensation.


Do you need to know more about your rights as a creditor? Find out how the bankruptcy professionals can help you protect against your creditor risks by contacting our attorneys today. With years of experience, we know what questions to ask and what actions to take.


Use the form below to send us a note, call us at 214.890.0711 or chat with us live. We are eager to help with your legal needs. Please keep in mind that any unsolicited information sent through our website cannot be treated as confidential. Contacting us through this site does not create a representation relationship with Fears Nachawati.

Contact Us


With offices across Texas, and attorneys licensed in Texas, Florida, Arkansas, New Mexico, California, Illinois, District of Columbia, Missouri and Oklahoma, Fears Nachawati is dedicated to attaining the best possible solutions for our clients’ business and personal needs. We strive to be professionals who are creative, empathetic and reliable.

All Areas Served

We Can Help

Contact Fears Nachawati today

Free Consultation

Live Chat (Online Now)