It’s a scenario that many homeowners have faced: You hired a contractor to do some work on your home, and you already put down a significant deposit for the materials and labor at hand. Now your contractor has suddenly disappeared mid-job, and he won’t return your calls or give you an idea as to when your project might be completed. You do a little digging, and you find out that your contractor has, in fact, filed for bankruptcy, thereby leaving your home in shambles and putting you in quite the predicament.
As a bankruptcy lawyer with more than 20 years of experience in the industry, Stephen Graves of San Antonio’s Graves Law Firm has seen this type of thing happen before. Unfortunately, he can’t offer much in the way of advice for those who happen to fall victim to such occurrences. According to Graves, if your contractor suddenly files for bankruptcy while he’s in the middle of your home improvement project, then you do have the right, as do all of his other creditors, to file a claim against him for economic damages. These damages can include the money that you paid him to do a job that he never finished, as well as the financial impact of having to deal with a half-finished construction project at home. However, if your contractor has filed for a Chapter 7 liquidation, then don’t expect to get too much out of him in the way of money, as he probably doesn’t have any to go around.
Of course, the most frustrating thing about this type of situation is that when it comes down to it, it’s probably not money that you want from your bankrupt contractor. Rather, you simply want him to return to your home and finish the job that he was hired to do. In fact, you might be thinking that just because your contractor has run out of money doesn’t mean that he’s suddenly been rendered incapable of performing physical labor. Therefore, don’t you have the right to file a “labor claim” against him, thereby forcing him to come back and make good on his promise to complete your home improvement project?
While the idea might seem logical in theory, according to Graves, it is not something that will hold up in practice. In any bankruptcy proceeding, you can only file a monetary claim against a debtor. You cannot file a claim or motion compelling someone to perform physical labor (well, technically you can file whatever you want, but a judge is extremely unlikely to go for it). Therefore, although it makes sense that you should be entitled to the labor you paid for since you’re not asking for actual money, the bankruptcy process simply doesn’t work that way.
So what can you do to prevent this type of thing from happening again in the future? For starters, you can try only hiring a contractor who is willing to accept a small deposit upfront and the majority of payment at the conclusion of the job. You can also make sure that your contractor is bonded, which essentially guarantees that should he fail to complete the job, the bonding organization will pay to have someone else come in to finish it in his place. Finally, to avoid the problem of having your contractor go bankrupt mid-job, try to choose someone with a solid reputation who has been in the business for quite some time. Many homeowners have a tendency to hire the least expensive contractors out there in an attempt to save money. But in most cases, those who are willing to offer their services on the cheap don’t tend to be the most financially stable. Therefore, you should always remember that low-cost labor does tend to come at a different sort of price.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
