The bankruptcy process is designed to help creditors (persons or entities who are owed money) as well as debtors (persons or entities who owe money). And one of the powers given to creditors under bankruptcy law is the power to force a debtor into bankruptcy against the debtor’s wishes—known as involuntary bankruptcy.

Involuntary bankruptcy usually involves a group of creditors filing a bankruptcy on behalf of a debtor—usually a business—where the creditors believe the business can pay its obligations to the creditors, but is refusing to do so. Involuntary bankruptcy petitions against individuals are less common, as only affluent individuals are likely to have assets that may be used to pay the creditors. And a creditor can only file an involuntary bankruptcy case under Chapter 7 or Chapter 11—not under Chapter 12 or Chapter 13.

In Michigan, as in all states, the bankruptcy process is governed by federal law, specifically the U.S. Bankruptcy Code. Creditors have the right to file an involuntary bankruptcy petition against a debtor under certain circumstances. This action is typically taken when creditors believe a business debtor is not paying its debts despite having the means to do so. Involuntary bankruptcy can only be initiated under Chapter 7, which involves liquidation of assets, or Chapter 11, which allows for business reorganization. It is less common for creditors to file involuntary bankruptcy against individuals, as it is usually reserved for those with substantial assets. To initiate an involuntary bankruptcy, the petitioning creditors must meet specific criteria, including the minimum number of creditors and the minimum amount of debt owed. If the debtor contests the petition, the court will determine if the requirements for involuntary bankruptcy have been met. If the court approves the petition, the bankruptcy process proceeds similarly to a voluntary bankruptcy, with the goal of fairly resolving the debtor's obligations to creditors.