What Is Involuntary Bankruptcy?

Involuntary bankruptcy refers to a bankruptcy case where a bankruptcy application is filed by a creditor. When the debtor cannot pay off the debt, the creditor can apply for bankruptcy. However, some national laws stipulate that a specific debtor can only apply for bankruptcy voluntarily, and cannot file involuntary bankruptcy to protect its interests. For example, the United States Bankruptcy Law stipulates that involuntary bankruptcy may not be filed against farmers, non-profit corporations and people with low wages. Some national bankruptcy laws provide that a single creditor can apply for bankruptcy regardless of the amount of debt. However, some countries have restrictions on the number of applicants or representative debts that creditors should reach when they file for bankruptcy applications. For example, the UK Bankruptcy Act of 1914 stipulated that if a creditor filed for bankruptcy, his unsecured claims must exceed 50 pounds, or he should apply jointly with others. US bankruptcy law requires that when there are more than 12 creditors, there must be more than 3 creditors with unsecured claims totaling more than 5,000 US dollars in order to file a bankruptcy application. At this time, it is not subject to this limit, and bulk creditors can still apply separately. Creditors without property guarantees have the right to apply for bankruptcy. Whether an involuntary bankruptcy application can be filed with a secured creditor. ^[1]