What is Involuntary Bankruptcy?
After falling behind on payments, many people choose to file for bankruptcy. While many people look to bankruptcy as a way to clear their financial mistakes, this isn’t always the case. Sometimes a creditor may find it beneficial to force an individual or business into bankruptcy.
A creditor may do this in order to try to get the money that they are owed. If you are involved in an involuntary bankruptcy case, you may have some questions. Below are some facts about the involuntary bankruptcy process.
Why does a creditor choose to do this? A creditor may benefit from involuntary bankruptcy in the following ways:
· It forces a debtor to stop using assets before an anticipated bankruptcy
· It forces a debtor to pay all creditors instead of picking and choosing who to pay
Creditors are unable to bring Chapter 7 or Chapter 11 involuntary bankruptcies against the following:
- Non-profit companies
- Credit unions
- Insurance companies
- Savings and loan businesses
In addition, stock and commodity brokers are barred in Chapter 11 cases. Railroad companies are barred in Chapter 7 cases.
This is a risky proceeding, so involuntary bankruptcy is not very common. The following are rules that are associated with this type of bankruptcy:
- If a debtor has over 12 creditors, at least three creditors have to join in on the involuntary bankruptcy petition
- All creditors involved in the involuntary bankruptcy would have to prove that a debtor is not paying debts on time
A debtor does not have to accept the bankruptcy petition:
- Within 20 days, the debtor must file an objection
- If the debtor objects, it will force a trial
The filing can be dismissed if the debtor is able to prove the following:
- The debtor owes less than the creditor(s) claim
- The debtor has a record of timely payments
- The debtor is able to make payments now and in the future
- The creditor acted in bad faith by filing the involuntary bankruptcy
If you find yourself involved in an involuntary bankruptcy case, it is important to get the help and guidance of an experienced bankruptcy attorney.
For help, call Geygan & Geygan
If you are looking for an experienced bankruptcy law firm to counsel you throughout an involuntary bankruptcy case, contact Geygan & Geygan. We can support and guide you throughout the entire legal process. Call (513) 793-6555, or email firstname.lastname@example.org. Our office is located in the Kenwood area of