If you’re struggling to make monthly debt payments on time or missing payments completely, you may be eligible to file for bankruptcy. However, there are many who consider bankruptcy to be a last-ditch effort to save their finances. Whether you’re ready to file for bankruptcy or want to try to work through your debts another way, the full bankruptcy process might still be in the cards. This is because it’s possible for your creditors to force you into an involuntary bankruptcy if your debts and properties fit certain criteria. If you’re pushed into an involuntary bankruptcy in Fairmont, MN, Behm Law Group, Ltd. can protect you and guide you throughout the process.
Bankruptcy law is designed to benefit both the consumer or business as well as the creditors involved in the highest capacity possible. You may not want to file for bankruptcy, but you might be forced to “choose” this process anyway if your creditors file an involuntary case against you.
Involuntary Bankruptcy
The U.S. bankruptcy code protects creditors against negligent debtors by allowing them to file involuntary cases against those debtors, pushing them to file for Chapter 7 bankruptcy (Chapter 13 is not permitted in an involuntary case). When a debtor neglects their debts yet still maintains valuable assets, creditors can petition the courts to force that debtor into a liquidation bankruptcy process that’ll result in two things. First, creditors will gain some repayment from the liquidation of the debtor’s assets. Second, the debtor will receive discharges for the related debts. The majority of involuntary cases are filed against businesses rather than individuals, family farmers, or fishermen, but creditors can force individuals into bankruptcy if they owe significant debts and have adequate assets for creditors to benefit from in liquidation.
Rules
- One or more creditors must file a petition to set the ball rolling on an involuntary bankruptcy case.
- The debtor must respond to the petition within 20 days of receipt or the court will automatically force the debtor and creditors to start the involuntary bankruptcy process.
- If the debtor responds within 20 days, a hearing date will be established that’ll allow the debtor to defend themselves against the bankruptcy.
- If a debtor has more than 12 unsecured creditors, there must be a minimum of three creditors (with at least $15,775 owed to them in unsecured debt) participating in the petition for an involuntary bankruptcy.
- A single creditor can file an involuntary petition if the debtor owes them at least $15,775 and that debtor has under 12 unsecured creditors.
- Debts cannot be disputed or dependent on future legal decisions (e.g. lawsuit-related debts).
- Involuntary bankruptcies cannot be filed against family famers or fishermen, banks, insurance companies, credit unions, or non-profits.
If you’ve been avoiding debt payments for some time and are worried your creditors may try to file an involuntary case against you, contact Behm Law Group, Ltd. today at (507) 387-7200 to learn more about bankruptcy in Fairmont, MN.
