Nearly all bankruptcy petitions filed in the U.S. are initiated by individuals and companies who are actively pursuing bankruptcy. In very rare circumstances, individuals or companies may have involuntary bankruptcies filed against them. If you’ve received notice of an involuntary bankruptcy, you need to contact an experienced lawyer right away.
Reasons for Bankruptcy
Individuals file for voluntary bankruptcy because they want the chance to start over with a clean slate. Debt can sometimes be insurmountable, and bankruptcy may be a viable solution to a stressful problem. Involuntary bankruptcies are filed on behalf of creditors, not the debtors themselves. The reason is that the creditors want to obtain the money they’re owed.
Types of Bankruptcy
When an individual voluntarily files for bankruptcy, he or she may file for either Chapter 13 or Chapter 7. Chapter 7 bankruptcy eliminates all dischargeable debts, whereas Chapter 13 restructures debts and enables the debtor to repay them. In an involuntary bankruptcy filing, creditors can only file for Chapter 7, not Chapter 13. There are other restrictions too. For example, creditors cannot file an involuntary bankruptcy against family farmers or fishermen, and they cannot file a joint involuntary bankruptcy against a married couple.
Resolution of Bankruptcy
In a voluntary bankruptcy, the court may approve the plan or dismiss the case. In an involuntary bankruptcy, the debtor has three choices. First, he or she may contest the bankruptcy. Second, the debtor may decide that bankruptcy really is the best course of action, and proceed with the case. Third, the debtor may decide to continue with the bankruptcy, but convert it to Chapter 13.
Whether your bankruptcy is voluntary or involuntary, you need sound legal guidance from seasoned lawyers you can count on. Contact the bankruptcy law firm of Cutler & Associates, Ltd. at (847) 961-4572 to request a consultation. Our attorneys work with families throughout Aurora, Schaumburg, and the greater Chicagoland area.