We tend to think of bankruptcy as a purely voluntary process. While it’s not an easy decision to make, we still control to a large extent when we see a bankruptcy attorney and which chapter we file. Then we willingly file the petition to obtain relief from a difficult debt load and stop collection actions such as wage garnishment and foreclosure.
Because we’re so familiar with voluntary bankruptcy, it may come as a surprise to know that you can technically be forced into bankruptcy by your creditors. In this blog, we’ll go over what you need to know about involuntary bankruptcy and how a California bankruptcy attorney can help.
Involuntary Bankruptcy- How It Happens
With involuntary bankruptcy, one or more of your creditors files a bankruptcy petition against you or your business. When it happens, it is usually because they believe that you have the ability to pay but simply refuse to do so.
If you have no more than 12 creditors, the petition can be filed by one creditor whom you owe at least $16,750. If you have more than 12, three creditors with an aggregate debt total of $16,750 can file.
Not all creditors can force you into bankruptcy. Employers, insiders, or the recipients of an undone money or property transfer do not have the standing to file.
What Can You Do if It Happens to You?
If a creditor subjects you to involuntary bankruptcy, you do have options. They include:
If you are facing an involuntary action, contact a bankruptcy attorney who can go over these options with you. At Hedtke Law Group, we will help you reach a decision that delivers the best outcome for your financial situation. To schedule your free consultation, call our Upland office at 909-579-2233, Covina office at 626-521-5488, or Moreno Valley office at 951-746-1722.