Voluntary Bankruptcy Related Questions
Do you need to understand the difference between voluntary and involuntary bankruptcy? Or, can a person dismiss Chapter 7 voluntary bankruptcy? When a person voluntarily declares bankruptcy it is due to lack of assets to pay off the debts of the creditors. This bankruptcy process helps examine the debtor’s assets to determine how they can be divided among the creditors, in a manner which can optimally satisfy the burden of debt. Voluntary bankruptcy can be beneficial in dealing with creditors and avoiding lawsuits. To understand more about this proceeding, read below a few questions about voluntary bankruptcy have been answered by Experts.
What is the difference between voluntary and involuntary bankruptcy?
Voluntary bankruptcy is where one files proactively on their own. Involuntary bankruptcy is where a group of creditors compel a person to file for bankruptcy as the debtor has no funds to repay. A creditor or group of creditors are authorized to file an involuntary case against a debtor in case certain criteria are met under the bankruptcy code. If the debtor has less than 12 creditors, only one is required to file the involuntary petition. If there are more than 12 creditors, three need to combine and file.
If an adversary attorney is not affordable, can a person dismiss their Chapter 7 voluntary bankruptcy?
A person does not have an automatic right to dismiss their chapter 7 bankruptcy once they have filed for it. If they intend to dismiss it, a motion to dismiss would need to be filed where one needs to prove to the court why a dismissal would not be detrimental or disadvantageous to the creditors. To get this process started, first a motion to dismiss should be filed along with the voluntary bankruptcy petition. If no objections are raised (if there is no prejudice to the creditors), the bankruptcy can be dismissed.
After filing a voluntary bankruptcy petition under Chapter 7, are the liabilities treated as ‘secured’ under schedule D or F?
If the property is no longer owned by the person, the debts are considered ‘unsecured’ and are categorized under Schedule F. The debts are neither contingent nor unliquidated because the fact is that money is owed to another and one is aware of the amount that is owed. However, if any of the debts were listed as ‘secured,’ ‘contingent,’ or ‘unliquidated’ they would have still been discharged. Though mistakes while filing voluntary bankruptcy are common, these mistakes rarely affect a discharge and the debtor is usually able to amend them without affecting the discharge.
Does conversion of voluntary bankruptcy from Chapter 11 to Chapter 7, make the bankruptcy involuntary?
Case Details: The trustee converted to a Chapter 7 despite the debtor’s wish to dismiss.
This type of conversion does not convert the voluntary bankruptcy to an 'involuntary.' However, a Chapter 7 bankruptcy cannot be dismissed without approval from the court. In case one qualifies for a Chapter 13, they have absolute right to convert to this chapter as well as the right to dismiss it. In case one does not qualify for Chapter 13, a court approval is necessary to dismiss the Chapter 7. The person also has the choice to move to court to dismiss the voluntary bankruptcy instead of forcibly being under Chapter 7 or file a motion for reconsideration.
What can be done if a tenant is filing a voluntary bankruptcy, but five years remain on the lease with the landlord?
If this is a Chapter 7 bankruptcy, the lease is not valid for any rent owed from the date of filing. In case the trustee rejects the lease after filing, there is a chance that the landlord would be given some priority administrative payments for ongoing rent as long as the tenant remains on the premises. In case the tenant immediately moves out, the landlord is not entitled for anything. A landlord can also take action to lift the automatic bankruptcy stay and evict the debtor after 30 days from filing. If Chapter 11 bankruptcy was filed, the debtor can either assume or reject the lease. Typically, under the threat of rejection, the debtor tries to negotiate a new lease with the landlord. If it works, the debtor has a lease to exit bankruptcy in a better position by paying bills. If not, the debtor can reject the lease and the landlord would need to take further action of evicting the debtor. If the landlord receives a notice of the bankruptcy filing from the court, a proof of claim should be filed. Alternatively, if the landlord has grounds to terminate the lease currently, it can be done. If it is successful, the lease would not be subject to the bankruptcy court authority thereby improving leverage against the tenant.
After a voluntary bankruptcy, can a person remain a secretary and second signatory of checks at a club?
Once a bankruptcy order is drawn out, ideally, one should immediately cease using any check book and bank cards. They should be handed over to the ‘Official Receiver’ because usually, all bank accounts are frozen once the bank is aware of the bankruptcy order. In this case, though the asset does not directly belong to the person filing, one needs to cooperate with the official receiver. On doing so, they may even allow the person to continue assisting the club without any prejudice to the position held but the bank would need to agree to such an arrangement.
Inability to pay debts can lead to a lot of stress and tension especially if the situation is not conducive or under control. This is when voluntary bankruptcy can be helpful to choose the best possible route and follow the right path of action towards reduction and extinguishing of one’s debts and credit issues. If you have other questions on voluntary bankruptcy pertaining to your particular situation, contact legal Experts online for guidance and professional insights, quickly and more importantly, economically.