The term “bankruptcy” is often met with enough fear, and adding the word “involuntary” makes it almost seem like it is forced. What is an involuntary business bankruptcy, you may ask? In a sense, it is business that is forced into filing bankruptcy; but, that doesn’t always mean a bad thing. In fact, filing for business bankruptcy can be a better solution to debt problems than avoiding obligations or ending up in court being sued by a creditor.
What Is An Involuntary Business Bankruptcy ?
The first is forced but voluntary where the business itself files for a Chapter 7 or Chapter 11 bankruptcy. This is done in response to a collection or legal notification from a creditor threatening the business over unpaid debts. This process can stop the creditor from foreclosing on a property the business is making payments on, levying the business bank account or other legal action.
The second is a true authentic involuntary bankruptcy in which the business owner’s creditors obtain a legal order to force the company into liquidation bankruptcy. This is rare and highly complicated as it takes three or more creditors, a minimum of $14,000 of owed debt and proof that the business has never attempted to pay the debt for the court to grant a creditor this order.
If you are a small business that has fallen behind on debt payments or just beginning to feel the financial pressure, contact a Houston business bankruptcy lawyer about your options for protecting what is left of your company and eliminate debt problems.