If you are struggling with debt, you are not unlike many in Memphis. Yet your hope may be that you will be able to avoid action such as bankruptcy while still maintaining a firm financial footing. However, there may be scenarios where you are left with no choice. One of those may be where your creditors force you into bankruptcy. Many who encountered such a scenario have come to members of our team here at Ben Sisssman, Attorney at Law asking is such an action is indeed legitimate. It is, but only under certain circumstances.
Those circumstances are detailed in Section 303 of the U.S. Bankruptcy Code. Here it states that if a creditor holds a claim against you that is more than $10,000 an is not contingent upon liability or a claim of bona fide legitimacy, it can initiate an involuntary bankruptcy petition against you. This scenario applies only if you have fewer than 12 total creditors. If you have more than that, then three holding an aggregate amount of more than $10,000 in claims must work together to initiate the petition. Once a petition has been filed, you have 21 days to respond or an automatic stay will be imposed and you will be placed into bankruptcy. An appropriate response may be to contact the creditor(s) and attempt to make repayment arrangements to avoid the cation going any further.
Typically, an involuntary bankruptcy is filed if your creditor(s) believe that you have recoverable assets yet there are concerns that they will not be paid from them. You can only be forced into a Chapter 13 bankruptcy (either individually or through your business). More information on federal bankruptcy guidelines can be found throughout our site).