Keep a Contractor's Bankruptcy From Becoming Your Loss

Bankruptcy changes your collection options. Karalynn shares how a subcontractor recovered $50,000 after a GC went bankrupt, then explains how lien rights protect unpaid contractors and how schedules of values, lien waivers, and joint checks help general contractors avoid paying twice when a subcontractor fails. Learn more about The Cromeens Law Firm here ! Read more about punch lists here , and listen to our deep dive about them here . Grab Karalynn's new book Trust Your Gut here . Follow Karalynn Cromeens on Facebook here . Follow Karalynn Cromeens on Instagram here . Follow Karalynn Cromeens on LinkedIn here . Watch the show on YouTube here . Key Takeaways 1. A contract claim against the party that hired you and a properly preserved lien against the project provide different collection paths, which becomes especially important when that hiring party enters bankruptcy. 2. Act promptly when credible reports suggest a GC is in financial trouble because relying only on a claim against the bankrupt company can leave you pursuing payment as an unsecured creditor. 3. In Karalynn's grocery-store example, a subcontractor's $50,000 lien helped secure payment for completed work before the contractor continued directly for the owner. 4. When hiring a subcontractor, obtain a schedule of values identifying downstream subcontractors, material suppliers, and planned amounts so you can track who needs to receive project payments. 5. Use appropriate lien waivers and joint checks to verify or direct downstream payments because paying the subcontractor alone can leave the GC facing unpaid suppliers' liens and the risk of paying twice.