Many people don’t know that they can be forced into bankruptcy without having filed a petition. This is referred to as an “involuntary bankruptcy.” Involuntary bankruptcy may be initiated under a Chapter 7 or Chapter 11 bankruptcy only. You cannot be forced into a Chapter 13 bankruptcy.

You may be forced into an involuntary bankruptcy if you are in debt to fewer than twelve unsecured creditors. A single creditor must hold an unsecured claim against you of at least $10,000. Otherwise, the single creditor will have to join with your other creditors to file the lawsuit. In that instance, there must be at least three creditors with unsecured claims against you that add up to $10,000 or more. Because of these specific conditions you probably will not have to worry about being forced into bankruptcy if you get behind on your credit card.

 Involuntary bankruptcy will usually not be your creditors’ first choice. Your creditors may choose this option because it will force you to confront all of them at once, rather than only paying those creditors who are most aggressive. Another reason for a creditor to consider an involuntary proceeding is to prevent you from draining all your assets before finally having to file for bankruptcy.  Be aware that creditors are cautious about taking this path because if their petition for involuntary bankruptcy is denied, the court may award you costs and attorney’s fees.

If you live in Denver, Aurora, Arvada, Brighton, Broomfield, Commerce City, Englewood, Highlands Ranch, Lakewood, Lafayette, Littleton, Northglenn, Westminster, Wheat Ridge, or Golden, Colorado, please feel free to contact me with any questions.  

Kevin D. Heupel, Colorado Bankruptcy attorney, 303-955-7570, COBankruptcyHelpEmail, free-consultation form.