What many don t realize, however, is that their creditors can force them into involuntary bankruptcy. Since ancient Rome, laws have regulated selling off property to pay back creditors. Early English statutes allowed only for involuntary bankruptcy, which creditors initiated. Voluntary bankruptcy was an American invention that didn t appear until 1721. Eventually, both England and the United States adopted rules for both voluntary and involuntary bankruptcy, with the common goal of converting the debtor's assets known in this country as the debtor's estate into money for creditors.
Creditors initiate an involuntary bankruptcy for several reasons.
It forces a debtor to confront all his creditors at once, instead of forking over money only to those who press the hardest. It also keeps a debtor from draining all his assets before finally giving up and filing for bankruptcy. But woe to aggressive creditors when the bankruptcy court denies their petition for involuntary bankruptcy. Beginning an Involuntary Bankruptcy Creditors begin an involuntary bankruptcy case by filing a petition and a summons with the clerk of the U.S. Bankruptcy Court. The debtor has 20 days to file objections.