Lawline Online Course: A field Manual for Involuntary Bankruptcies - Thursday, 11/5/2020 at 3:00pm EST
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Please Note: We are OPEN, continuing to represent clients and accepting new clients However, due to local directives, all meetings and interviews can be conducted via telephonic or video conferencing. Do not hesitate to contact us with any questions, concerns or requests for information. Our free 15 minute telephone consultation remains available.
Involuntary bankruptcy cases are where creditors file a petition to put a debtor into bankruptcy. They can be filed against individuals, as well as entities. When people think of an involuntary bankruptcy petition against an individual, celebrities and the fallen “well to do” come to mind.
People don’t think of their neighbor, who defaulted their first or second mortgage a year or two ago.
The Covid-19 pandemic has seen states restricting foreclosure actions. This is frustrating mortgagees holding mortgages where the debt exceeds the property’s value. So, they are using an alternative remedy, to get control of their collateral: involuntary bankruptcy cases.
We have seen individual involuntary cases filed in a “bad faith” effort to avoid regular debt collection processes. They can be dismissed with the petitioners sanctioned severely. However, it is possible to file one, in good faith, and put someone into bankruptcy.
The summons in an involuntary bankruptcy petition is served by first class mail. People mistakenly think that service was improper because the summons was not hand delivered. If you receive a summons, in any manner, don’t ignore it. Doing so can result in your defaulting in the proceeding. Then you start losing rights. Regaining those rights costs money.
For some, the involuntary petition should be contested and fought, due to the dire consequences to them. For others, it may be the realization of the inevitable. Every case, like every person, has its idiosyncrasies.
If you receive a summons issued by a bankruptcy court, contact a bankruptcy lawyer to discuss your rights and options.