Involuntary Bankruptcy

[robivi3]

Has anyone here dealt with involuntary Bankruptcy. I went over my former lawyer site today and he has a section on it. He states that more people will face this as a result of the new laws. has anyone experienced it?

[StaciMM]

I've read that its possible-don't know how it would come about. ITs when the creditors force you to file BK but I don't know anything more than that. Most BK filings are voluntary.

[FoolAndHisMoney]

[Minnymouth]

Not familar with "involuntary bankruptcy" - but have heard of it....... has something to do with creditors forcing you into it to take your assets....

We'll have to do some research and get back with you on it.....

Anybody else know anything about this???

[Genenco]

O heard about it, but mostly in UK (England) as their laws have something weird with creditors who want their money, but a debtor not giving anything, nor filing paperwork which would empower the creditors...

In addition, they could force it if the debtor is about to receive large amounts of cash and thus, they can "Freeze it" so as to have a piece...

[robivi3]

Have to ask my Soliciter on that...

[Genenco]

Here's for the US denziens:

An involuntary bankruptcy case is initiated when one or more creditors files a petition and a summons with the clerk of the U.S. Bankruptcy Court. The debtor has 20 days to file objections. If that happens, the case can go to trial to determine if the filing was appropriate. If the debtor does not object, the bankruptcy proceeds in the same fashion as a voluntary case. An involuntary case can be initiated only under Chapter 7 or Chapter 11 of the Bankruptcy Code, not under Chapter 13.

Most creditors prefer to pursue their claims outside of bankruptcy to avoid having to share the debtors assets with other creditors and to avoid the expenses that are involved in a bankruptcy. However, when friendly creditors are being paid out of the debtors available assets but not other creditors, or when assets are being wasted or hidden, an involuntary bankruptcy can provide relief in a number of ways. First, it will stop any further payments or transfers. Second, it may allow a trustee to recover preferential payments.

Involuntary Bankruptcies and Bankruptcy Reform

Involuntary bankruptcies may dramatically increase under new bankruptcy reform laws. One aspect of the new legislation limits the homestead exemption. Five states (including Florida) now offer their residents an unlimited homestead exemption. This has lead to numerous abuses. One new law will limit the homestead protection available in bankruptcy if the Debtor has not owned his or her home for a specified period. A second proposal will prevent a debtor in bankruptcy from claiming as exempt any equity fraudulently transferred into the home within the past ten years. A creative creditor may file an involuntary bankruptcy for the sole purpose of destroying the debtors homestead protection. This may become a new cottage industry

Regarding UK...I have done a search and it shows to be "Somewhat" similar...But there's differences of course...

Please check robvi, I surely don't want to get an email saying "but Gene says so!"

[FoolAndHisMoney]

Seems like the people that wanted the change in law so much are getting the $h!t end of the stick. If someone in Fla. simply just waits to file, the creditors will force them to take the means test, credit counsiling, then take the case to court? I guess MBNA people will drag a debtor to credit counsiling then file. Can't wait to see how this one works out.





QUESTION:
Florida and 5 other states have an unlimited homestead exemption. In Florida that exemption is embedded in the Florida Constitution. Since 1978 we have relied on that State Constitution to protect our unlimited homesteads. Where in the new code, if at all, is the authority to undermine Florida\'s Constitution?

ANSWER:
Dennis J. LeVine:
Florida still has an unlimited homestead exemption for residents who are NOT in bankruptcy, so Florida residents who may be "caught" in the new homestead cap should simply not file bankruptcy for a while.

I think the simple answer may be that the supremacy clause of the U.S. Constitution controls. To the extent the U.S. Constitution conflicts with the Florida Constitution, then the federal law should be supreme. Under this theory, federal laws can limit rights under state law. This may not sit well with many supporters of "states rights", but the recent decisions of the Supreme Court will probably uphold these provisions of the Code. The debtor has voluntarily filed bankruptcy, so he gets the burdens and the benefits of the Bankruptcy Code. The more difficult question on this issue may arise when an individual is put into bankruptcy involuntarily.

[Genenco]

The funny thing about the CC rates going up..Reminds me of that commercial where the guys rolls around says things like "Like my car? It's new!" and "I even belong to the local golf club" the kicker is when he says "How do I do it?"

And the kick is "I'm in debt up to my eyeballs"

Come this year, more of those "Keeping up with the Joneses" are going to be seeing the inside of a large room as they're going to (Bleep) their pants when the bills come due!

[GoingDown]

This is scary to me. I will definitely be watching this thread to find out what happens with this. If anyone finds out anything about this, please post links to the info in this thread. Thanks.

I don't have any significant assets, so I doubt that they will force me into involuntary bk right now. But if I inherited some money or property, they might try it then.

[robivi3]

Oh, I'm not in one. Just wondered if anyone was.