Personal bankruptcy is a personal choice that you may consider if you are experiencing insurmountable financial difficulties. The option to pursue a Chapter 7 or Chapter 13 bankruptcy is yours alone – or so you may think. What if someone told you that your creditors may petition the court for your bankruptcy against your will?
Lenders may, in fact, request that those who owe them money be forced into bankruptcy, according to FindLaw. Fortunately, involuntary bankruptcy is rare for individuals, although you may be interested in learning how this action can benefit creditors. It does them no good to send collection notices and bills to debtors if they are ignored. However, when eligible assets are liquidated through Chapter 7 bankruptcy, the funds are used to repay creditors. Those who owe significant debt may have a higher chance of being pushed into involuntary bankruptcy than the average debtor.
What is involuntary bankruptcy used for, you may wonder? Businesses typically have greater assets to assist creditors in debt recovery, so creditors may file involuntary bankruptcy petitions for Chapter 11 bankruptcy against businesses far more often. It is also worth noting that Chapter 11 and Chapter 7 bankruptcies are the only types eligible for involuntary petitions; people or businesses cannot be forced into Chapter 13 bankruptcy.
It can help to know that in the off chance you are informed by a creditor that bankruptcy proceedings are being filed against you, you have the right to object to the action. You may also wish to educate yourself on your available options to assist you in recovering from financial difficulties. This information is not meant to replace the advice of a lawyer.