Preventing the Involuntary Filing of Bankruptcy Against You
Most people are aware of the fact that they may file for bankruptcy and discharge their debt. However, most are unaware of something called an involuntary bankruptcy, in which your creditors file your own bankruptcy. In such cases, you have no say in the matter once the bankruptcy case is approved. So it is important to be aware of what an involuntary bankruptcy is, and how you can prevent one.
Involuntary bankruptcy cases are very unusual for individuals. In certain circumstances, however, they do happen. For instance, if you owe a great deal to your creditors, and one of your creditors is being paid over the others, those creditors not being paid may feel it is in their best interest to file bankruptcy for you. Also, if a creditor believes you have the money to pay them but are choosing not to, they may file for bankruptcy to obtain those assets.
While most bankruptcy filings are done to protect the bankrupt individual, involuntary bankruptcies are filed to protect the creditors. Because the individual is not being advantaged by such a case, the bankruptcy laws require a set of circumstances to exist for an involuntary case to be filed. There is, for instance, an amount that creditors must be owed before they can petition the court for your bankruptcy. This amount varies by jurisdiction.
If a bankruptcy has been filed for you by your creditors, you do have the right to object within 20 days. Then, a hearing will be conducted to determine whether or not to permit the involuntary bankruptcy.
You can avoid an involuntary bankruptcy by not paying some creditors more than others. Additionally, you can keep the amount you owe your creditors below the amount required for an involuntary bankruptcy petition to be permitted. Once a case is brought against you, you should object on every ground possible, utilizing a skilled bankruptcy attorney.
Bankruptcy is an important strategic tool to help you when you are in financial trouble. But filing for bankruptcy should be your decision, not your creditor’s. If you are facing involuntary bankruptcy, or fear that you may in the future, an experienced local bankruptcy attorney can help you understand your options.