Mississippi creditor cause of company's bankruptcy petition

Bankruptcy proceedings can begin a number of different ways. A Mississippi resident may have individual financial woes and decide that it is appropriate to file for personal bankruptcy. Outsiders can also start the bankruptcy process, including Chapter 7, for another person or business.

One Mississippi creditor decided to take the bankruptcy process into its own hands. In November, a small Mississippi creditor along with creditors in two other states approached the bankruptcy court in their quest to beginning involuntary bankruptcy proceedings against a company in a neighboring state. Together, the three creditors filed an involuntary petition for Chapter 7 bankruptcy.

The petition requests the liquidation of the company in order to satisfy outstanding debts. A bankruptcy judge has approved these proceedings continuing on. The company has been ordered to file of list of creditors along with other financial information.

Some may be surprised to learn that Chapter 7 bankruptcy is not just for individuals and does not just involve a personal choice.

The Bankruptcy Code outlines that several individuals and corporate entities may be eligible for Chapter 7 bankruptcy: individuals, partnerships, corporation and other business entities can all file for Chapter 7 bankruptcy.

The Code also provides third parties, who are primarily creditors, with the right to initiate involuntary bankruptcy proceedings. As long as the creditor meets certain requirements, it may be able to begin the bankruptcy process for another individual or company.

Thus, having a firm grasp of your financial situation is important. It can help you stay in command of the bankruptcy process instead of being subject to an involuntary petition. Furthermore, it is important to understand any options available to an individual or business when it comes to alleviate financial hardships.

Source: mysanantonio.com, "Cardell enters Chapter 7 bankruptcy proceedings," Neal Morton, Dec. 17, 2013

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