San Francisco Bankruptcy Attorney Blog

A San Francisco bankruptcy attorney comments on Involuntary Bankruptcy and Credit Counseling

When the bankruptcy code was amended in 2005 one of the new provisions added by Congress was the requirement that all those planning on filing bankruptcy had to first complete a certified credit counseling course. This pre-filing requirement is mandatory for those who wish to file for bankruptcy. There is a question of whether involuntary proceedings against a debtor require the same compliance with the law.

Several courts have addressed the issue of involuntary bankruptcy and credit counseling completion. It would be rather difficult to comply with the requirement that the course be taken 180 days prior to filing when the petition is an involuntary one, because the debtor is not filing the petition; it is a creditor instead. It seems to be the consensus that the requirements do not apply to those debtors who are involuntary brought into bankruptcy.

Involuntary bankruptcy and credit counseling requirements would frustrate the purpose behind the credit counseling purpose initially sought when Congress made the changes. The purpose behind the credit counseling requirement is to allow the debtor to make an informed choice about whether to file. In an involuntary proceeding, the debtor is not making a voluntary choice and therefore requiring the course prior to the filing of an involuntary petition would not be in line with the goals Congress had in mind when the code was amended.

Therefore, creative debtors in an involuntary action cannot dismiss the bankruptcy for failure to comply with the credit counseling requirement. Involuntary bankruptcy actions are not subject to the credit counseling requirements.

If you have questions regarding bankruptcy in San Francisco or bankruptcy in the greater Bay Area please contact our San Francisco Bankruptcy Attorneys at (415) 946-8882 for a free consultation or visit www.bkanswers.com and we can connect you with one of our experienced San Francisco Bankruptcy Attorneys. After you have spoken with one of our Bay Area bankruptcy attorneys, we can schedule you for a free face to face appointment in an office location nearest you. Our team of Bankruptcy Lawyers, Bankruptcy Customer Care Specialists and Bankuptcy staff supporting San Francisco and Bay Area consumers in debt can assist you with all aspects of your bankruptcy or bankruptcy litigation case. If you have questions about filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, or would like to learn more about bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. we can help! We have bankruptcy attorneys located throughout California and Oregon who can assist you with all of your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, San Francisco Bay Area!

A San Francisco bankruptcy lawyer answers: Where Do I Find Involuntary Bankruptcy Lawyer?

What is involuntary bankruptcy?
Involuntary bankruptcy arises when creditors of an individual or a corporation file a petition with the bankruptcy court in order to start bankruptcy proceedings against a debtor. It is called “involuntary” because the debtor is not making the decision on whether to file, rather the debtor’s creditors are making that decision.

Do I need an involuntary bankruptcy lawyer?
Although you are not required to be represented by an involuntary bankruptcy lawyer, having an involuntary bankruptcy lawyer represent you during your involuntary bankruptcy proceeding is a smart decision given the complexities that can arise during a bankruptcy proceeding.

What can an involuntary bankruptcy lawyer do for me?
When an involuntary bankruptcy action is instituted against you, it means that your creditors are hoping for some type of payment on the balances owed to them. An involuntary bankruptcy attorney will review your financial situation and file that information with the court. Retaining an involuntary bankruptcy attorney will allow you to protect your assets and try to keep as much of your property out of the bankruptcy proceeding as possible.

If you have questions regarding bankruptcy in San Francisco or bankruptcy in the greater Bay Area please contact our San Francisco Bankruptcy Attorneys at (415) 946-8882 for a free consultation or visit www.bkanswers.com and we can connect you with one of our experienced San Francisco Bankruptcy Attorneys. After you have spoken with one of our Bay Area bankruptcy attorneys, we can schedule you for a free face to face appointment in an office location nearest you. Our team of Bankruptcy Lawyers, Bankruptcy Customer Care Specialists and Bankuptcy staff supporting San Francisco and Bay Area consumers in debt can assist you with all aspects of your bankruptcy or bankruptcy litigation case. If you have questions about filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, or would like to learn more about bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. we can help! We have bankruptcy attorneys located throughout California and Oregon who can assist you with all of your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, San Francisco Bay Area!

A San Francisco bankruptcy attorney provides an Involuntary Bankruptcy FAQ

What is involuntary bankruptcy?

Involuntary bankruptcy arises when creditors of an individual or a corporation file a petition with the bankruptcy court in order to start bankruptcy proceedings against a debtor. It is called “involuntary” because the debtor is not making the decision on whether to file, rather the debtor’s creditors are making that decision.

What chapters of the bankruptcy code allow for an involuntary filing?

Involuntary bankruptcy proceedings can be brought against an individual or a corporation for chapter 7 and chapter 11 bankruptcies. The bankruptcy code does not provide for an involuntary chapter 13 filing.

Are involuntary bankruptcies common?

No, involuntary filings are very rare and almost never brought against individuals. Involuntary proceedings against businesses are more common but the overall percentage of those involuntary cases is still very low.

What happens to the debtor’s estate in an involuntary chapter 7 proceeding?
Generally a trustee is appointed to oversee the debtor’s estate in an involuntary proceeding to prevent the loss of the estate. If the debtor operates a business the trustee might also be appointed in order to continue with the business operations.

Can the bankruptcy court dismiss an involuntary proceeding?

Yes, the bankruptcy court has the power to dismiss involuntary bankruptcy actions. If the debtor does not waive his or her right to judgment, the bankruptcy court may grant judgment in favor of debtor against petitioners for costs or attorney’s fees. If the proceeding was brought in bad faith the court may award debtor any damages caused by the filing or punitive damages.

If you have questions regarding bankruptcy in San Francisco or bankruptcy in the greater Bay Area please contact our San Francisco Bankruptcy Attorneys at (415) 946-8882 for a free consultation or visit www.bkanswers.com and we can connect you with one of our experienced San Francisco Bankruptcy Attorneys. After you have spoken with one of our Bay Area bankruptcy attorneys, we can schedule you for a free face to face appointment in an office location nearest you. Our team of Bankruptcy Lawyers, Bankruptcy Customer Care Specialists and Bankuptcy staff supporting San Francisco and Bay Area consumers in debt can assist you with all aspects of your bankruptcy or bankruptcy litigation case. If you have questions about filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, or would like to learn more about bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. we can help! We have bankruptcy attorneys located throughout California and Oregon who can assist you with all of your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, San Francisco Bay Area!