Involuntary Bankruptcy

Definition - What does Involuntary Bankruptcy mean?

Involuntary bankruptcy refers to a specific type of bankruptcy that can be filed in the United States. A person or a business is forced into bankruptcy by creditors. Creditors who force involuntary bankruptcy on a person or a company are doing so in order to try and get as much of their money back as possible.

Justipedia explains Involuntary Bankruptcy

Involuntary bankruptcies are rarely entered into in the United States. Bankruptcy law makes it very difficult for any creditors to receive payment on the owed debts. If they are fortunate enough to receive a payment in a bankruptcy with assets, it is almost always pennies on the dollar. One reason that a creditor can force an individual or company into involuntary bankruptcy is when the individual or company is seriously delinquent in payments to the creditor.

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