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How Do I Get My Final Paycheck If My Employer Is Filing Bankruptcy?

  • By: Christopher Benson
  • Published: December 7, 2014

When you find out your employer is filing for bankruptcy, your last paycheck may be your first concern. But if you keep your cool, you avoid a larger, more personal financial crisis.

You may not find out your company is in trouble until they actually shut their doors—only companies larger than 100 people are required to notify employees 60 days in advance of a mass layoff. Under bankruptcy law, employees have first claim for up to $10,000 in wages. However, you are only eligible for wages earned in the 180 days leading up to bankruptcy, and you’ll only get them if your employer has any cash left. You will not be paid for benefits owed, such as vacation or sick days that are sometimes paid out if they go unused.

It also matters what kind of bankruptcy the company is filing. Chapter 11 bankruptcy is corporate reorganization of debt—the company may have to lay off workers or sell assets, but it will survive. In Chapter 7 bankruptcy, the company sells off all assets in order to liquidate and pay off debt. Any pending litigation and administrative costs get paid out ahead of wages, and when it’s gone, it’s gone. That includes your COBRA medical benefits as well.

In short, if your employer closes it’s doors, don’t expect your last paycheck for weeks or maybe even months, and if you’re concerned that you haven’t heard anything for a while, contact your local Department of Labor or talk to an attorney about your options.

Over the past 32 years, the Law Offices of Christopher A. Benson has helped over 2,300 of Washington clients take control of their financial situation. We can stop your garnishment and change your monthly payments for all your combined unsecured debt, and if you have had more than $600 garnished within the last 90 days, we can get all of the money back in most cases. But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.

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