In most cases, people declaring Chapter 7 or Chapter 13 bankruptcy make the decision to file after assessing their situation and determining that doing so makes the most financial sense. In some cases, though, creditors can actually request bankruptcy on behalf of the debtor. This is known as involuntary bankruptcy. Whether you are facing involuntary bankruptcy or are considering filing of your own accord, you can count on quality legal advice from Thomas A. Corletta, Attorney & Counselor at Law in Rochester, NY. Below, he explains the proceedings for involuntary bankruptcy.

Legal Advice: A Guide on Involuntary Bankruptcy

When Can Creditors Start a Case Against a Debtor?

Creditors can only file a bankruptcy petition against individual debtors and business entities in certain circumstances. If the debtor owes money to more than 12 creditors, at least three creditors must file the petition. They must also hold judgments against the debtor of at least $13,475 combined, and they must be able to prove that the debtor is insolvent.

How Can You Stop Involuntary Bankruptcy?

Involuntary bankruptcy typically starts as Chapter 7 bankruptcy. In some cases, liquidation bankruptcy is in the debtor’s best interests, and they may not want to challenge the petition. If you don’t want to file for bankruptcy after eligible creditors petitioned against you, you must challenge their petition and prove your financial situation does not satisfy the requirements for involuntary bankruptcy. An attorney will provide sound legal advice and help you gather all of the necessary paperwork in order to build your case.

In most cases, involuntary bankruptcy is a last resort for creditors in an attempt to recover a fraction of what the debtor owes them. If you cannot make your monthly payments, it is typically best to take action long before your creditors file such a petition.

If you are struggling to pay down your debt and you’re concerned about involuntary bankruptcy, turn to Thomas A. Corletta, Attorney at Law in Rochester. To learn about his experience in bankruptcy and family law, check out his website. You can also call (585) 546-5072 when you’re ready to seek effective legal advice regarding your financial situation.