The decision to file for bankruptcy is usually a personal one, but there are some exceptions. It is possible for your creditors to file on your behalf. If you have received notice that an involuntary bankruptcy has been filed for you, here is what you need to know.
What Is an Involuntary Bankruptcy?
In an involuntary bankruptcy, you could be forced to file for bankruptcy. There are rules to when it could occur. For instance, if you are indebted to one creditor for $15,325 or more and you have less than 12 creditors, one of the creditors could file.
You could also face an involuntary bankruptcy if three or more of your creditors who you owe a combined $15,325 or more decide to file. The debts must be unsecured to qualify. Unsecured debts do not have collateral backing them up.
What Are Your Legal Options?
Once you receive the notice that bankruptcy has been filed on your behalf, you have very little time to decide what to do. The amount of time allowed to take action can vary from state to state. Refer to the filing notice to determine how much time you have.
One of the options you have is to allow the bankruptcy to continue. In this instance, you would be faced with a Chapter 7 bankruptcy. At the end of the filing, if you meet all of the requirements, your debts would be discharged.
You can also choose to convert the filing from a Chapter 7 to a Chapter 13. In a Chapter 13 filing, you are responsible for paying off your debts. In order to qualify for a Chapter 13 filing, you have to prove that you are financially able to meet the terms of the repayment plan. The income requirements for Chapter 13 can vary by state, so check with your bankruptcy attorney to find the exact figure needed.
Your final option is to fight the bankruptcy filing. If you plan to fight the filing, you need to file a petition or objection with the court. If you do not file the objection within the time stated on the bankruptcy notice, it is very possible that it will be allowed to go through by the court.
Once you file your objection, you will have to attend a court hearing. During the hearing, you will need to argue why the involuntary bankruptcy should not go through. If you plan to pay the debts, you need to show a plan for how you plan to do it.
Regardless if you plan to let the bankruptcy go through or fight it, you need to talk to a lawyer. He or she can help you understand the ramifications of each decision and help you choose what is best for you.
To learn more, contact a bankruptcy lawyer like Arthur M Richard.