woman filing for bankruptcy

Can You Be Required to File for Bankruptcy?

Filing for bankruptcy is often a tough decision that one must make. But sometimes, the decision is not theirs to decide. Sometimes creditors can actually make someone who is in debt to them file for bankruptcy against their will. This is called an involuntary bankruptcy. So how can you protect yourself from creditors who wish to force you to file for bankruptcy?

Involuntary Bankruptcy

One of the reasons that you may not have heard of involuntary bankruptcy is because it’s not common – and for good reason. Involuntary bankruptcy helps certain types of creditors to collect specific types of debt by forcing a debtor to file under Chapter 7 or Chapter 11 of the U.S. bankruptcy code. This generally only occurs in a situation in which the individual in debt owes a very large amount of money or owes to many different creditors. 

Limits to Creditors’ Actions

It’s necessary to understand that creditors who wish to file involuntary bankruptcy against a debtor must abide by specific restrictions. Creditors are prohibited from:

  • Neglecting to carry out their due diligence and investigate the operations of the company that they wish to file involuntary bankruptcy against.
  • Petitioning for an involuntary bankruptcy under the provisions of Chapter 13
  • Filing for involuntary bankruptcy against a family farmer or fisherman, or other companies that qualify. 

If a creditor wishes to file an involuntary bankruptcy against a debtor who has more than 12 creditors total, it must file a petition with at least two other creditors involved. The debtor must owe at least $16,750 in non-contingent, unsecured, and undisputed debt. 

Defending Against Involuntary Bankruptcy

If you have been subjected to an action for involuntary bankruptcy, you may be able to fight it by demonstrating how your creditors’ claims aren’t justified or true. This will usually be done in front of a judge, who will decide how the involuntary bankruptcy should proceed after listening to both sides. 

You can get immediate relief from creditors who are harassing you, threatening you, or filing an action against you with the help of an experienced lawyer.

Toronjo & Prosser Law Helps Those Who Are Dealing with Bankruptcy 

Filing for bankruptcy is a big decision that can have a long-lasting impact on many different aspects of your life. It is a decision that should never be taken lightly, and one that should be your choice – not someone else’s – whenever possible. That’s why it’s so important to consult with a knowledgeable and experienced Dallas bankruptcy attorney who can help you to defend against your creditors’ petition. Additionally, if any creditors are currently harassing you, an attorney can also help. At Toronjo & Prosser, our qualified Texas Bankruptcy Attorneys can help you to navigate the process. To learn more or to schedule a free consultation contact us online or call us today!