Bankruptcy

Remedies for false bankruptcy involuntary bankruptcy petitions

By David Leibowitz, Illinois and Wisconsin Bankruptcy

Bankruptcy records are public. Even an involuntary bankruptcy petition is public. We talked about involuntary bankruptcy petitions in a recent post.

But an involuntary bankruptcy petition can do substantial damage to you even if it is later dismissed.

Help is available. The Bankruptcy Code allows a debtor to get an involuntary bankruptcy petition sealed under some circumstances. Here are the conditions:

• the petition is false or contains any materially false, fictitious, or fraudulent statement
• the debtor is an individual
• the case was dismissed

Not only that, but if an involuntary bankruptcy petition is filed and then dismissed, the court can order payment of costs and attorneys fees. And in the case of an involuntary bankruptcy petition which is filed in bad faith, the court can also grant a judgment against the petitioners for punitive damages.

Involuntary bankruptcy petitions can be very frightening. But you can defend them and you frequently can defeat them.

Full post as published by Bankruptcy Law Network on February 12, 2010 (boomark / email).