Involuntary Bankruptcy

by M
(Henderson, NV)

A debt collector is threatening to file involuntary bankruptcy against my husband for a credit card debt owed by a sole proprietorship of which he was owner. The business was registered in California, but is no longer operating. His last payment to the original creditor was in 2006. We moved to Nevada in 2008 after losing our home to foreclosure in 2007. We are living with relatives since we cannot afford to rent. My husband is retired and has no assets left. We subsist on his meager income from social security and pension. What are the consequences if he cannot be represented in an involuntary bankruptcy and if he does not respond? He cannot afford a lawyer to represent him if there is an involuntary bankruptcy case filed against him.

Comments for Involuntary Bankruptcy

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Apr 10, 2011
Involuntary bankruptcy

So sorry to learn about your financial problems!

I am not an attorney so I cannot give you legal advice, but here is what I know about an involuntary bankruptcy. First, forcing someone into an involuntary bankruptcy is a big step. Therefore, the federal bankruptcy law has established specific rules and requirements related to it. For example according to my information, 3 creditors would be required to initiate an involuntary bankruptcy if your husband owes money to at least 12 creditors. (I assume that the debt collector who is threatening him purchased the debt from the original creditor so the collector now qualifies as a creditor.) If you husband owes money to less than 12 creditors, then just 1 of those creditors can initiate the bankruptcy. However, regardless of the number of creditors involved, the total amount of the debt must amount to at least $14,425 in order for there to be an involuntary bankruptcy. Furthermore, even if your husband owes this much or more, an involuntary bankruptcy would only make sense if you had assets that could be liquidated -- sold -- so that the proceeds could be used to pay the debt, and it sounds like that is not the case. So, the debt collector may be threatening your husband with an involuntary bankruptcy simply to try to scare him into paying the debt.

I strongly recommend that you set up a meeting with a consumer bankruptcy attorney right away so you can get clear about what is going on and discuss the best way to respond to the collector's threat. If the collector is making a threat that he cannot follow through on then he is breaking the law and your husband may have grounds for a lawsuit. By the way, your initial appointment with a bankruptcy attorney will be free. Click here for
a free consultation with a bankruptcy attorney.

Best of luck resolving your problem!

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