The Law Dictionary

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If I Owe Money to a Company that is Going Bankrupt, Do I Still Have to Pay Them?

War Drafts

Yes, even if a company is going bankrupt, you still have to pay what you owe them. Why? Just because a company is going bankrupt does not mean your debt is eliminated.

If you have purchased goods or services from a company, you still owe them for what you received from them. If it is a personal loan, credit card company, auto loan, or home loan, of course, you have to pay it back. You have already received the money, the car, or the home.

Look at it like this: the company you owe money to also owes money to its creditors. When a company enters bankruptcy, a trustee is appointed to liquidate the company’s assets and use the proceeds to pay the creditors. The money you owe them is one of the company’s assets.

If I Don’t Pay The Company That Is Going Bankrupt


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What Happens If I Don’t Pay The Company That Is Going Bankrupt?

If you do not pay the debt, you will face collection efforts. Since the company is going through bankruptcy, it will generally use an outside collection agency or third-party collection agency. Once the money is collected, it goes to the trustee who then pays the company’s creditors. It is better to pay the money that you know you owe rather than face a lawsuit or other collection efforts.

If the bankruptcy is a restructuring rather than liquidation, you may not even know the company is going through bankruptcy unless it is announced on the news. When a company goes through a debt restructuring bankruptcy, known as a Chapter 11 bankruptcy, the company keeps going about its regular tasks to earn money to pay their creditors.

Yes, the company may have received all or partial forgiveness on some of its debts. At the same time, they need to stay in business to pay the money they owe. It is also true that some employees may lose their jobs in the restructuring. This may result in:

  • Slower customer service
  • Slower technical service

However, if you purchased the product or service, you must pay for these items.

If it is a monthly service such as a cable or telephone bill, yes, you do need to keep paying for the service as long as you continue to use it. Just to be safe, keep paying your bills as normal to a bankrupt company unless you receive other instructions.


This article contains general legal information but does not constitute professional legal advice for your particular situation. The Law Dictionary is not a law firm, and this page does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

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