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Involuntary Bankruptcy Process

Involuntary bankruptcy happens when someone or maybe even a business owes money to creditors, and afterwards a creditor requests that the person should file for bankruptcy. The creditor that request for involuntary bankruptcy feels that this is a way that they will collect on funds that should be given to them

How does the automatic stay affect the petitioning creditor? Am I allowed to file suit to get a judgment against the party if I am the one who filed the involuntary bankruptcy? Do I have immunity from the automatic stay that I created?

When things get to this point it is usually the last option in efforts to try and collect a debt, first a person must have a debt that is owed to that person. Also the person must be any kind of issue and the amount can’t go pass $14200.

Also, if that person turns out to be unsuccessful they could end up paying the debtors legal fees instead. To avoid issues it would be good to plan out all other legal means of collecting on the debt by fist obtaining a judgment. And the automatic stay would apply to all creditors including that person and filing a lawsuit would alone defeat the petition as it would show that the debt can be fought.

If a bankruptcy court lost track of an involuntary bankruptcy case and never discharged or dismissed it and the creditors for the case never asked to be released from the automatic stay does the automatic stay remain in effect until someone sees that it's still active?

Yes; automatic stay remains in effect until the creditors file a relief from the automatic stay or until the case is closed or maybe dismissed. The discharge order does not release the Automatic Stay as a case might reopen for one reason or another after the Discharge Order from the Court. There are two ways that would release the Automatic Stay apart from the creditors asking for the relief and being granted the request by the Court and that’s a case dismissal and also if the case was to be closed.

I was put in to involuntary bankruptcy in the state of Florida. The case went now where and was dismissed 4 years later. Do the statue of limitations on debts continue during the 4 years or are they suspended while the bankruptcy was pending?

There are a number of things that may suspend the Statute of Limitations (SOL) for the collection of debts. SOL also shows how the states that are listed have events that are the only ones that can toll the SOL. Bankruptcy don’t get suspended though. In addition to that, the Statue of Limitations is not suspended while the Bankruptcy is in progress.

A couple is getting ready to look into filing bankruptcy in the state of CA. 1) Can state income tax debts qualify? 2) If bankruptcy is granted, do I have to pay taxes on the amount of debt that is discharged? 3) What is the average cost of filing? 4) Can I keep my home out of the bankruptcy?

A person can’t discharge income tax debts. Also, the person doesn’t have to worry about paying taxes on the debt that has been discharged. A Chapter 7 will cost $306 to file, and it would be lower to file a Chapter 13 costing $281 to file. Lawyer fees will be more costly it would be around $1500 for a Chapter 7, and about $3500 for a Chapter 13; those prices are not exact. They are just estimates of what a person may pay for lawyer fees. In order to keep property, a person would need to keep payments current with the house. If that is handled properly, then there should be no problem keeping with keeping the home.

Having the right information about involuntary bankruptcy can help individuals deal with difficult situations and make the right decisions. Ask Experts about involuntary bankruptcy and other related topics.

Ask a Bankruptcy Lawyer

FiveStarLaw
FiveStarLaw, Attorney
Category: General
Satisfied Customers: 3311
Experience:  Bankruptcy Lawyer. Experienced.
9968427
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Recent Involuntary Questions

  • For Wallstreetesq only, I was told that statue of limitation

    For Wallstreetesq only, I was told that statue of limitation of federal tax was 10 years so I verified with you. but I found out it's 20years as stated below. Is it 10 or 20years? &quot;California: 20-Year Collection Period from the Date of Assessment R&amp;TC
    Section 19255 was created in the beginning of 2006 to require the California Franchise Tax Board (FTB) to permanently abate tax debts after 20 years. R&amp;TC further established specific circumstances under which debts will remain due and payable beyond the 20-year
    period. The 20-year statute of limitations begins to run from the date of assessment, commonly called the statutory lien date (SLD). R&amp;TC Section 19221 defines the date of assessment or the statutory lien date (SLD) as follow: • If a tax liability is not paid
    at the time that it becomes “due and payable,” a perfected and enforceable state tax lien is created for the amount of the tax liability. This point in time is called the assessment date or the SLD. • If more than one liability is “due and payable” for a particular
    taxable year, the later date is used. For example, if a taxpayer files a return with a balance due on April 15, 2010, and later gets an audit and receives a Notice of Proposed Assessment that becomes due and payable on April 15, 2012, the SLD is April 15,
    2012. The 20-year period is extended for any period during which the FTB pursues a civil action or files a probate claim and it does not expire until that liability, probate claim or judgment against the taxpayer is satisfied or becomes unenforceable. The
    20-year collection period is suspended for any period of time that the FTB is precluded by law from pursuing collection actions. This includes provisions barring the FTB from pursuing collection activities as a result of a taxpayer's child support delinquencies,
    filing for bankruptcy, entering into an installment payment agreement, serving in a military combat zone, or residing in a presidentially declared disaster area. The suspension period applies with respect to both parties of any liability that is joint and
    several. For many years, no statute of limitations existed on the collection of an income or franchise tax delinquency. Beginning in 2006 2, a statute of limitations (SOL) on our collection actions went into effect. R&amp;TC Section 19255 was created to require
    us to permanently abate unpaid debts after 20 years, and established specific circumstances under which debts will remain due and payable beyond the 20-year period. When does the 20-year SOL start? The time period begins to run on the assessment date, commonly
    called the statutory lien date (SLD). Collection stays suspend or extend the 20-year SOL. For example, a bankruptcy, an approved installment agreement, or during any other period during which collection of a tax is suspended, postponed, or extended by operation
    of law will serve to extend the SOL period. What is the SLD? R&amp;TC Section 19221 provides that if a tax liability is not paid at the time that it becomes “due and payable;” a perfected and enforceable state tax lien is created for the amount of the tax liability.
    This point in time is called the assessment date or the SLD. If more than one liability is “due and payable” for a particular taxable year, the later date is used. For example, a taxpayer files a return with a balance due on April 15, 1999, and we later audit
    the year and issue a Notice of Proposed Assessment that becomes due and payable on April 15, 2001, the SLD is April 15, 2001. What are collection stays? Collection stays are the times when we cannot take involuntary collection action due to one or more of
    the following reasons: • The taxpayer/debtor is in bankruptcy plus six months. • The taxpayer/debtor is in an approved installment payment agreement. • The taxpayer/debtor is in serving in the military and in a combat zone. • The taxpayer/debtor is in child
    support collection plus 60 days. • We postpone collection because of a presidentially declared disaster or terroristic or military action. For more information for your clients in collection status, go to ftb.ca.gov and search for Collections Procedures Manual
    (CPM). 2 Applicable on and after July 1, 2006, to any liability due and payable before, on, or after July 1, 2006&quot;
  • Last year I made a purchase from a company which has entered

    Last year I made a purchase from a company which has entered involuntary chapter 7 bankruptcy. I made my purchase around 9 months before this occurred, in which the guaranteed delivery date was missed and a refund was never processed. I would like to know if my proof of claim should show this debt as entirely unsecured or if some part of it would fall under 'Entitled to Priority under 11 U.S.C. §507(a)'.
  • To Socrateaser: I asked a question previously about a house

    To Socrateaser: I asked a question previously about a house I have an interest in where the owner is deceased. We are looking at probate options.
    Now the first lien holder has set the house for a foreclosure sale.
    Is there any way a bankruptcy can stop the foreclosure sale? I'm not exactly sure how to file a bankruptcy for an estate. Can an estate file a bankruptcy? Does it need an EIN?
    I could file an involuntary bankruptcy on the dead owner, but I'm worried the US Trustee might say that's not a proper course of action.
    Is there anything I can do?
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