Bankruptcy

Can I be forced into bankruptcy?

By David Leibowitz, Illinois and Wisconsin Bankruptcy

It’s rare, but it is possible for creditors to force you into bankruptcy. Usually, your creditors would rather you not be bankrupt. That way, they can keep garnishing your wages, taking money from your bank account, seizing your property and doing everything they can to collect their debts and make your life miserable.

But if the creditors think you are hiding assets or making fraudulent transfers, they may want to force you into bankruptcy.

If you have less than 12 creditors, just one creditor can file an involuntary bankruptcy petition. Otherwise, three creditors must join in filing a bankruptcy case against you. And oddly enough, nobody can file an involuntary bankruptcy petition against a farmer!

Not every creditor can file a bankruptcy petition. The petitioning creditor must have a debt in a fixed amount which is not disputed. Not only that, the petitioning creditors have to prove to the court that you are not generally paying your debts as they come due.

Not long ago, we represented a man whose ex-wife tried to file an involuntary bankruptcy petition against him. She tried to get her mother to join in along with her children. The children were disallowed as a separate party. And the mother-in-law’s debt was not allowed to count because it was barred by the statute of limitation. Our client owed her money but for such a long time that the ex-mother-in-law would not be allowed to collect in court.

So the case was dismissed and all of the credit reporting agencies were ordered to correct our client’s records.

If you are facing an involuntary bankruptcy petition in Illinois or Wisconsin, Lakelaw can defend you. Call us at 1 866 LAKELAW (525-3529).

Full post as published by Bankruptcy Law Network on February 11, 2010 (boomark / email).