Bankruptcy of Sub-contractors
The sub-contractor is normally an individual. His bankruptcy is most often occasioned by the failure of his employers to pay him or his men. This non-payment is often the fault of the sub himself. The reason is that sub-contractors, laborers and suppliers have at their disposal the most effective legal legal collection tool that any other unsecured creditor, except for the government. All the sub has to do is to take advantage of his right to file liens on the job.
It is not necessary for the under-capitalized sub to hire a lawyer each time he wants to file a lien, but if he works it right he can force the contractor to pay his attorney fee. The statute that defines the lien rights of sub-contractors is intentionally easy to follow. The sub should join an organziation of subs and contractors and obtain an instruction book. He should put in place a system not only for the timely filing of liens but also the collecting of them. He can provide in his contract for a high interest rate and attorney fees and those provisions are collectible through the lien. Building liens of this nature are always paid eventually.
On issue that arises for subs is the exemptability of their equipment. Normally tools of the trade, including vehicles used in the trade are exempt. But there are limits, for instance, to more than one vehicle.
Otherwise the bankruptcy of a sub is essentially uneventful.