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Voluntary bankruptcy is a bankruptcy proceeding commenced by the debtor; bankruptcy instituted by an adjudication upon a debtor's petition. Involuntary bankruptcy, on the other hand, is a bankruptcy case initiated by a debtor's creditors.
Key Takeaways Voluntary bankruptcy is a bankruptcy proceeding that a debtor initiates because they cannot satisfy the debt. This type of bankruptcy is different than an involuntary bankruptcy, which is a process originating from creditors.
A petition may be a voluntary petition, which is filed by the debtor, or it may be an involuntary petition, which is filed by creditors that meet certain requirements.
A voluntary bankruptcy is the most common type of bankruptcy proceeding. It is initiated by a debtor who wishes to seek relief from their debt burden. Involuntary bankruptcies are very rare. They are initiated by creditors who want to receive payment for what they are owed from a debtor.
Involuntary Emergency Admission (IEA) The person being admitted must pose a likelihood of danger to self or others as a result of a mental health condition.
A bankruptcy petition filed by creditors, usually to force a debtor to enter a liquidation proceeding under Chapter 7. The debtor can contest the petition and can choose to convert it into a case under Chapter 11.