Chasing Down What You’re Owed When the Debtor’s Broke

You won your case. Or maybe you’re just trying to get paid on a long overdue invoice. But then comes the gut-punch—your debtor’s broke. No cash, no assets in plain sight, and suddenly, you’re wondering if it’s even worth pursuing. The truth? You still have options. In New York, you don’t have to walk away empty-handed. With experienced commercial litigation attorneys, there are smart, strategic ways to recover what’s yours—even when the other side claims to have nothing.

At Horn Wright, LLP, we help creditors across New York cut through the noise and uncover real paths to repayment. From working with trustees and receivers to asserting priority in bankruptcy, we make sure your claim gets the attention it deserves. If someone’s ducking responsibility, we’ll put the law to work and follow every dollar trail until the fight’s done.

Squeezing Blood from a Stone? Smart Ways to Recover in New York Insolvency Cases

When someone can’t pay—or pretends they can’t—you need creative legal strategies. It’s not always about seizing property or forcing immediate payment. Sometimes, it’s about controlling what happens next.

Working with Receivers or Trustees

In certain cases, courts appoint a receiver or a trustee to oversee the debtor’s assets. These neutral parties:

• Take control of the debtor’s finances
• Investigate hidden or mismanaged assets
• Sell off property to repay valid claims

Receivers are more common in state-level commercial cases, while trustees show up in bankruptcy proceedings. Either way, if you're part of the process, you may recover more than you expect.

Negotiating Structured Settlements

If someone’s insolvent, that doesn’t always mean they’re judgment-proof. Many businesses and individuals can still make payments—just not all at once.

A structured settlement can:

• Break the total amount into monthly or quarterly payments
• Include interest and late penalties to offset the delay
• Provide legal enforcement if payments stop

These deals usually work best when there’s still a viable business or future income stream to tap into.

Get in Line First: How to Prioritize Claims Under New York Law

When a debtor’s assets are limited, it’s all about timing and positioning. Creditors who assert their claims early and clearly often end up with the largest slice of what’s available.

Secured vs. Unsecured Claims

If you’re a secured creditor, you have the upper hand. That means:

• You have collateral backing the debt (like a lien or mortgage)
• You get paid first when assets are liquidated

Unsecured creditors—those without collateral—still have rights. But you’ll be paid after taxes, employee wages, and secured claims are settled.

Want to move into secured status? File a UCC-1 financing statement or claim a lien early on. Timing matters.

Understanding Preference Actions

Under 11 U.S. Code §547, a bankruptcy trustee can claw back payments made to certain creditors within 90 days of the bankruptcy filing. These are called preference actions.

That means even if you got paid recently, it could be pulled back—unless you:

• Received payment in the ordinary course of business
• Provided new value in exchange
• Have a properly secured claim

A good attorney can help you defend against clawbacks and protect what you’ve already collected.

Legal Weapons for Creditors in a New York Insolvency Fight

Even when the other side is tapped out, you still have tools. Sometimes, pressure and persistence are more powerful than immediate payback.

Litigation Through Commercial Courts

New York’s Commercial Division is built for cases like this. It offers:

• Judges who understand complex financial disputes
• Faster procedural timelines
• Discovery tools to uncover hidden assets

With the right filing strategy, you can:

• Demand production of bank records and accounting data
• Issue restraining notices to prevent asset transfers
• Seek contempt orders for bad-faith noncompliance

It’s not about dragging someone through court for the sake of it. It’s about positioning yourself for the best possible recovery.

Playing the Bankruptcy Game: Maximize Your Cut in New York Filings

If your debtor files for bankruptcy, all hope isn’t lost. You just have to know how to play it.

Filing a Proof of Claim

Once a bankruptcy is filed, creditors need to file a proof of claim to get in line for payment. This document must:

• Outline the total amount owed
• Classify your claim (secured, unsecured, priority)
• Attach documents showing the basis of the debt

In New York bankruptcy courts, this is often the difference between getting paid—or getting nothing. File it wrong, file it late, or forget it entirely, and you may be left behind.

If you're a secured creditor, you may be entitled to proceeds from the sale of collateral. If unsecured, you’ll still get a percentage—assuming funds remain after priority claims are satisfied.

Push Forward, Even When They’re Broke

Just because someone claims they can’t pay doesn’t mean you walk away. At Horn Wright, LLP, our commercial litigation attorneys help clients in New York recover funds even when the other side is insolvent or hiding behind bankruptcy. We explore every option, apply pressure where it counts, and fight to secure your share. If you're ready to chase down what you're owed, it’s time to hire one of the best law firms in America. Call us now—because broke doesn’t mean off the hook.