The number of bankruptcy claims keeps on increasing year after year. The U.S courts revealed that creditors file over 800, 000 cases within a year. The number is likely to rise with the growing business dynamics and economic uncertainties. Operating a business comes with the risk of having creditors filing for bankruptcy. The involuntary bankruptcy claim is that which the creditors file against you. Two or more creditors may move to the court and apply to have you declared bankrupt.
Why Would Creditors File For Bankruptcy Against You?
- When you fail to meet your obligations to comply to the bankruptcy summons for payment of specific amounts to creditors
- When you have a terminated or failed personal insolvency agreement
- When the sheriff, county governor, or the relevant authorities find no asset to seize
- When you fail to meet your debt settlement arrangement with your debtors.
What are the Motives that Drive the Creditors to Apply to have you declared Bankrupt?
- The creditors may have the belief that you have some asserts that when sold can pay for their owed money
- The employees may want to recover the wages that you owe them
- They may want to stop you from obtaining credit from them in the future
- The creditors may have the idea that you are holding some valuable things
- They want your finances investigated further as they think you are sloppy
What are your Options?
Financial troubles in businesses are common. The first strategy is delaying the proceedings to buy yourself time to get things right. The second strategy is to provide evidence that proves the claims are not true and unverifiable. At this point, you need to find a qualified and experienced solicitor to help with the case. The experts will help you navigate the case as they know the specifics.
The first defense is to argue on the grounds of Numerosity. The law requires that two or more people file a claim against you. However, you can be ahead of them when you prove that there are other at least twelve more creditors. Make sure you find a pursuant from outside your business whom you owe money. Fill the list and present in the proceedings as the bankruptcy rule clause requires you to. It will then be up to the creditors to prove that the 12 creditors do not exist or they are less than that. The strategy can give you time to reorganize yourself and verify that the allegations are not valid.
- Pay Your Debts When Due
For the creditors to win the case, they will have to prove beyond doubt that you are not making payments. The judgment has its basis on your ability to pay and not necessarily failure to pay. There are various aspects that the courts look into when making a decision. Some include the amount of money unpaid, number of outstanding claims, your overall conduct in finances, and materiality of non-payments. One way to avoid debts is to get one and maybe multiple full home warranty plans that help in taking care of costly expenses. The plan helps in reducing the debts you owe the creditors.
- Disqualifying The Creditors Petition
For the creditors to successfully win the case, they will have to meet some specific requirements under the Bankruptcy code. The code is there to protect you against creditors who may want to threaten you and extort payments. You, therefore, have to go through their claim to make sure that they are valid and accurate. Their intentions for applying for your company’s bankruptcy ought to be objective and not subjective. Make sure that;
- The debt claim is valid
- The debt is not contingent as to liability
- The debt is not attached to the bonafide dispute to amount and liability
- The debt has a minimum of $ 15, 325 more than the value of their property.
By: Walter Bodell