Tuesday, December 22nd, 2009

Can a company refuse to do business with someone who has declared their debt in bankruptcy?

Debt Bankruptcy
golden_fire_lizard_for_you asked:


I work for a company that has had quite a few people declare bankruptcy on what they owe us, then as soon as the bankruptcy is discharged, they expect to come back as a customer. We are not a utility company or anything necessary like that. I was wondering, if we have to write off their debt, can we refuse to do business with them in the future?

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7 Responses to “Can a company refuse to do business with someone who has declared their debt in bankruptcy?”

Michelle Says:
December 22nd, 2009 at 6:37 am

you can refuse to do business with anyone that you want to as long as it is within the law of discrimination. Having clients that don’t pay their bills does not fall under this.

sunbun Says:
December 25th, 2009 at 5:10 pm

a company has the right to refuse to do business with anyone as long as they are not discriminating….u can’t refuse to do business with someone simply because they have purple hair

MALIBU93 Says:
December 28th, 2009 at 6:47 am

Actually, you can refuse to do business with someone who has purple hair, or any other hair for that matter. It just depends on how important that attribute is to your relationship to the customer whether you want to or not.
If the bankruptcy wanted to purchase stock in your company, and it was publicly traded, then you couldn’t prevent that, but if he walked into your offices to do business, you can throw him out.

Graham H Says:
December 29th, 2009 at 11:07 pm

Absolutely you can. Actually you don’t need to have any reason at all to refuse to do business with any customer or supplier whether or not you did business with them before.

If it is an incorporated company (with shareholders) you actually have a legal responsibility to the shareholders not to make business decisions which clearly put profits at risk.

In England it is also illegal to trade in deficit (with a minus figure at the end of your balance sheet) so trading with known defaulters already showing as bad debtors in your balance sheet could jeapordise your company’s existance by putting your balance sheet in deficit.

Hank Says:
December 30th, 2009 at 10:16 am

You should just make them pay you up front for their orders. Why lose the business when you can keep it if you just change the terms of the arrangement?.

Amanda H Says:
December 31st, 2009 at 2:13 am

Absolutely. You reserve the right to refuse service, and as long as it doesn’t fall under discrimination, you are legally okay. Not paying their debts is absolutely a reason to refuse service.

Studly Says:
January 1st, 2010 at 9:04 am

Every day I run into more morons answering these questions!!!!! Thank you Hank for standing out.

Why in the world would a company refuse someone’s business???

Give them whatever they want…but get your money up front. You don’t even have to be polite to them! You might even “pad” their bill to help recover their last bad debt. Lets see how badly they want to do business with you.

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