Voluntary Bankruptcy Versus Involuntary Bankruptcy – What Is The Difference?
What’s Happening

LATEST BLOG

“We’ve Been Helping People from Merrillville and Northwest Indiana Get Out of Debt for 20 Years”

Voluntary Bankruptcy Versus Involuntary Bankruptcy – What Is The Difference?

Voluntary Bankruptcy Versus Involuntary Bankruptcy – What Is The Difference?
November 01, 2016

Find Out Which Type Of Bankruptcy Is Right For You With A Merrillville Bankruptcy Lawyer

Sometimes, your financial situation can get so out of control that you need to face a decision about filing for protection under bankruptcy. It is hard enough to come to this conclusion on your own, but there are some occasions in which others make that decision for you. The Bankruptcy Code outlines the requirements for both voluntary and involuntary bankruptcies.

Voluntary Bankruptcies

A voluntary bankruptcy, under Section 301 of the Bankruptcy Code, is different than a traditional lawsuit because when a traditional lawsuit is filed, there is generally no relief available until the court has considered all of the facts and has made a ruling on the case, which often takes many months or even years. With a voluntary bankruptcy filing, on the other hand, all of the possible protections associated with bankruptcy are immediately available and automatically in place. Action must be taken to remove these protections. A voluntary bankruptcy may be filed by any individual and most entities without regard to whether there is actually an insolvency.  Many reasons may exist that lead a party to file for bankruptcy and, in many cases, owing money may not be the sole reason.

Involuntary Bankruptcies

In an involuntary bankruptcy, Section 303 of the Bankruptcy Code allows a creditor to file an action to compel a debtor, such as an individual or a business entity, into bankruptcy. This is not often used in the case of an average debtor because of the requirement that the petitioner must be able to prove that the debtor is insolvent before the bankruptcy can start. It is most often used in cases where the debtor is dissipating assets or engaging in other questionable behavior. The bankruptcy code provides for the avoidance of transfers of assets of the bankruptcy estate under specific circumstances. In these types of cases, bringing the debtor into bankruptcy court is desirable because the debtor’s actions can then be reviewed and controlled. An involuntary bankruptcy is a mechanism that allows the petitioner to bring any improperly transferred assets back into the estate.

What Type Of Debtor May Be Subject To An Involuntary Bankruptcy?

Generally, the only types of debtors that may be subject to an involuntary bankruptcy are those who are eligible to file for protection under a Chapter 7 or Chapter 11 bankruptcy. Exceptions include farmers, corporations that are not business, and commercial corporations.

Appointment Of An Interim Trustee

Once an involuntary bankruptcy has been commenced, a petitioner may request that the court order the United States Trustee to appoint an Interim Trustee to take possession of the estate’s assets and take over the business of the debtor. This allows for oversight and control of the debtor’s estate in an effort to preserve the property or prevent further loss of the estate’s assets. A typical scenario under which this type of relief may be sought includes that in which the debtor has failed to pay their debts when they are due unless the debtor is disputing the liability itself or the amount.

Get Professional Advice About Your Bankruptcy Options Now from an Indiana Bankruptcy Attorney

If you have reached the point where any type of bankruptcy seems to be unavoidable, you need to be able to turn to someone you can trust for competent and complete information about your options. An experienced bankruptcy attorney will be able to help you know what to do when your finances have gotten to this point. Reach out to the professionals at the Law Office of Attorney Kevin M. Schmidt for an honest evaluation of your bankruptcy options. Call us at 219-756-0555 or contact us online to get started today.

Categories

MOST VIEWED

Archives

Schedule A Free Consultation

At the Law Office of Kevin M. Schmidt, P.C., we offer a free consultation during which we will examine the facts of your case and advise you on how best to proceed

Our Phone Number219-756-0555
Contact via Emailinfo@kmslawoffice.net
Our Location200 E. 80th Place
Suite 110
Merrillville, IN 46410
Copyright 2018. All rights reserved | NUVEW
We are a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code. This website is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship. Testimonials are not a guarantee, warranty, or prediction of the outcome of your case.