Iowa Bankruptcy Lawyer Says Involuntary Bankruptcy May Be Defended | Iowa Bankruptcy Attorney

Iowa Bankruptcy Lawyer Says Involuntary Bankruptcy May Be Defended

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It is possible for individuals and businesses to avoid being forced into involuntary bankruptcy.

The more debt an individual or company incurs, the higher the risk becomes that creditors will file bankruptcy against them. This is referred to as involuntary bankruptcy, and in some cases, it may be justified. In other cases, it is necessary for the debtor to defend against involuntary bankruptcy petitions in order to avoid surrendering assets or being forced to sell them.

“Individuals or businesses who find themselves in receipt of an involuntary bankruptcy petition need to reach out to a qualified lawyer for help,” said Kevin Ahrenholz, an Iowa bankruptcy attorney. If an individual or company is served with an involuntary bankruptcy petition, one of the first things that individual or company must do, aside from hiring a reputable bankruptcy lawyer, is find every record on file relating to paychecks, monthly bills, loans, mortgages and lines of credit.  These documents are required to prove the amount actually owed to each creditor, versus what may be stated in an involuntary bankruptcy petition by a creditor. It is also helpful to provide a complete overview of net income and expenses, and then break down each month’s financial activity. Bank statements can also be used as evidence of past payments to creditors.  The idea is to demonstrate to the court that the debtor’s financial picture is improving. If it can be proved that the debtor’s financial liabilities are being paid, and he or she is making an effort to pay off debts owed, this is often enough to defeat an involuntary bankruptcy petition. If a debtor is able to prove that their debt is less than $10,000, this too may – in most states – defeat an involuntary petition.

Ahrenholz stated that the debtor has 20 days within which to file any complaints that he or she has against any creditor who has filed an involuntary bankruptcy petition against him or her.. When an objection is filed, the matter most often ends up in court. Once in court, the debtor can attempt to prove that the creditor merely filed the involuntary bankruptcy in order to gain favor over other creditors. The court may dismiss the petition, noting that the point of bankruptcy is to distribute assets evenly among all creditors and not just to select and prefer a few.  In the event that the debtor is unable to convince the court that the bankruptcy is unnecessary, the best way for the debtor to recover a position of control is for the debtor to work towards converting the case into a Chapter 13 bankruptcy.

Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact him, visit https://www.iowachapter7.com or call 1.877.888.1766.

Posted on Friday, August 10th, 2012 and filed under News and Press.
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