Fighting Against An Involuntary Bankruptcy Claim

Consumers who have significant issues with their debts could find themselves facing additional hardships, if their creditors choose to force an involuntary bankruptcy. This legal action is used against companies primarily, however; it isn’t limited to businesses alone. If you have received a petition notifying you of this action, you should contact an attorney at Bolinske Law today.

Explaining Involuntary Bankruptcy

Involuntary bankruptcy cannot go into effect until after the waiting period following the notification. The court will also refuse this action if the debtor doesn’t possess the assets necessary to settle the debts through chapter 7. This process allows the court to seize properties and assets to utilize for liquidation. A trustee for the court is assigned to the case to ensure that the debtor provides the court with the title for all properties listed in the claim.

What You Should Know

The court must provide the debtor with at least twenty days in which to respond to the claim. The business owner can hire an attorney and fight against the action prior to this deadline. However, the creditors must prove that they are not making payments. If the owner can present evidence to discredit the claim, they could avoid the bankruptcy case altogether.

In most cases, these claims are filed against business owners. However, in some instances, it is possible for them to file a claim for one debtor. Specific rules apply in these cases. In these cases, they must owe less than twelve creditors and owe no less than $5,000. The debts must be unsecured, and more than one creditor must join the claim. The involuntary bankruptcy can only apply to chapter 7 or 11.

Bankruptcy cases can be filed by creditors when debts are not acquired through traditional collection efforts. Whenever it is determined that a business owner is failing to pay their debts when the funds are readily available, a creditor can take it upon themselves to take this claim to court. They are required to present evidence of these occurrences in order for the judge to rule in their favor. If you wish to fight against an involuntary claim, you should contact your preferred attorney today.