Involuntary Bankruptcy: Information You Need to Know

Involuntary Bankruptcy: Information You Need to Know

Bankruptcy Lawyer

Bankruptcy is a personal choice for individuals. Involuntary bankruptcy is a forced decision to file bankruptcy by creditors. It is possible that creditors will force your hand to file. It's also rare and treated as a last resort because it's a higher risk for creditors to fail than succeed. In the rare case it happens to you, here's how it works.

Creditors can use one of two methods: gentle nudge or file behind your back. The "gentle nudge" is another phrase for "advised involuntary bankruptcy" or "voluntary bankruptcy by force." It's an involuntary bankruptcy where creditors leave you no other choice but to file. Simply file for chapter 7 and follow the procedure for court discharge.

The "file behind your back" is another phrase for "true involuntary bankruptcy." Creditors will legally file bankruptcy for you. You, however, continue to live life as if you never filed. The only way you'll know about it is when you get a letter in the mail. However, creditors have to meet certain requirements.

  1. A creditor must get other creditors to join. The rule is no more than 12 to file alone, but if there are more than 12 two of them must join you in filing involuntary bankruptcy.
  2. Then creditors must make sure you are eligible only for chapter 7.
  3. Next creditors must make sure the bill is the unsecured debt minimum (at last count $15325). Secured debt doesn't count.
  4. Finally, creditors must make sure the debtor isn't making an effort to pay the bill.

Creditors leave with nothing if the court doesn't agree with their case or they fail to get one of the four requirements previously listed.

Bankruptcy may not fit your situation, but creditors can legally make you file bankruptcy.

If you feel forced to file, we can help. Call a bankruptcy lawyer immediately for assistance on ways to handle involuntary bankruptcy. A few ways is to file an objection and file chapter 13. Filing an objection allows debtors to challenge the court agreement. If debtors win, creditors must pay their court/attorney fees and yours. Filing chapter 13 negates involuntary bankruptcy. For more information on bankruptcy, contact us.