Debtor Going Bankrupt ?

Bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their creditors.  A debtor, as a strategy to avoid paying any legal debt, including a lawful court judgment, may threaten to declare bankruptcy OR actually file for bankruptcy. 

Filing for bankruptcy provides the debtor with temporary protection from creditors.  This gets even more interesting when creditors take action to block this action from being effecitve. With the debtor's credit report in hand, documenting that the debtor is not actually insolvent, a creditor can inform the bankruptcy trustee that the filing is in "bad faith".  If the court agrees then the bankruptcy will not be approved.  A "bad faith" filing may be a "stalling tactic" enabling the debtor to gain additional time while he relocates (hides) his assets.  Before the court approves or disapproves a Bankruptcy filing creditors are not permitted any attmpts at collection.  The debtor is protect until the matter is resolved and protected permanently if his petition is approved.

Once we begin the process of enforcing legal judgments it is not unusual that the creditor be contacted by the debtor's attorney advising that they are considering bankruptcy proceedings. 

Little known is the fact that creditors may file a bankruptcy petition against a debtor ("involuntary bankruptcy") in an effort to recoup a portion or all of what they are owed.  In the majority of cases, however, bankruptcy is initiated by the debtor (a "voluntary bankruptcy" that is filed by the bankrupt individual or organization).

You can find more interesting and helpful information by reading our Frequently Asked Questions page here: FAQ  and also at our Main Page here:  Home

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