When most people are involved in bankruptcy, it is because they chose to initiate the case. However, under some circumstances, creditors may initiate an involuntary bankruptcy against a debtor. Involuntary bankruptcy may happen to both individuals and businesses, though a debtor does have the opportunity to challenge an involuntary bankruptcy petition if they do not wish to be involved in a bankruptcy. Though involuntary bankruptcies are relatively rare, they do occur in Long Island.
Requirements for an Involuntary Bankruptcy
Involuntary bankruptcy may be filed under Chapter 7 or Chapter 11 of the U.S. Code and both types of bankruptcy have the following requirements:
Additionally, the debtor must be insolvent, which means either failing to pay debts or having debts in excess of their assets.
If you or your business ever becomes the target of an involuntary bankruptcy, an experienced bankruptcy attorney can help you challenge the validity of the filing by presenting evidence that not all claims are met. Additionally, your attorney can negotiate with the creditors to see if you can come to an agreement regarding the debts outside of a bankruptcy case. Creditors are often willing to negotiate in this manner as they will usually stand to receive more repayment on the debt through out of court negotiations than they would in the Chapter 7 liquidation bankruptcy process, especially if you or your business does not have substantial assets to liquidate.
If an involuntary bankruptcy is approved, however, it will proceed against you and you may be subject to liquidation of your property. An experienced bankruptcy attorney is essential during this process to protect your assets and rights. If you find yourself as the subject of an involuntary bankruptcy, call The Law Office of Ronald D. Weiss, P.C. in Long Island today at 631.271.3737 for assistance.