When it comes to large loans, creditors and debtors alike deserve to be protected. If you loaned a large amount of money to a wealthy individual or business and haven't received payments according to your contract, a bankruptcy attorney can help you get your money back. By forcing the debtor into an involuntary bankruptcy, you and other creditors can ensure your contracts are upheld. If you have never heard of an involuntary bankruptcy before, this article will help you understand what it is and how it can be used.
What Is An Involuntary Bankruptcy?
When most people think about bankruptcy, they think about individuals or businesses choosing to declare bankruptcy when they can no longer pay their debts. Although this sounds like bad news for creditors, during any bankruptcy case, the debtor's assets are divided as fairly as possible among creditors. During a standard chapter 7 or chapter 13 bankruptcy case, debts may not be fully paid, depending on the assets available to the creditors. Involuntary bankruptcy cases, on the other hand, are filed by creditors against debtors who have the assets to pay debts but refuse to do so. In these cases, creditors are much more likely to get their money back.
Who Can Be Targeted?
Almost anyone who doesn't pay their debts can be the subject of an involuntary bankruptcy lawsuit, but filing isn't always worth the hassle or court costs. Businesses are the typical targets of involuntary bankruptcy cases, but wealthy individuals are sometimes targeted by creditors, as well. Some types of businesses and professionals can't be targeted, however, including farmers, banks, and credit unions, not-for-profit organizations, and insurance companies.
Are There Any Other Limitations?
Not just anyone can file an involuntary bankruptcy case against their debtor. To do so, a creditor must have loaned the debtor at least $16,750. Another important factor to consider before filing an involuntary bankruptcy is the number of creditors a debtor has. If a debtor has more than 12 unsecured creditors, at least three of these creditors must participate in the bankruptcy filing, and each one must have lent the debtor at least $16,750.
What Can The Debtor Do?
Debtors aren't without recourse during an involuntary bankruptcy case. They have 21 days to respond to a filing. By responding with the help of a lawyer, debtors can try to provide sufficient evidence that they don't have the assets needed to pay their creditors or that they have been paying their creditors on time. If debtors do not respond within 21 days, they are placed into bankruptcy involuntarily, and their assets are used to pay their debts.
To learn more about involuntary bankruptcy cases, contact a bankruptcy attorney in your area.Share