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 South Dakota, 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 Chapter 7 or Chapter 11 when they believe the debtor is not paying debts but has the means to do so. For involuntary bankruptcy to be initiated, certain criteria must be met, including a minimum number of creditors and a minimum amount of debt. Involuntary bankruptcy is more common against businesses rather than individuals, due to the likelihood of businesses having assets to satisfy creditor claims. Individuals can be subject to involuntary bankruptcy, but this is less frequent and typically involves individuals with substantial assets. It's important for both creditors and debtors to consult with an attorney to understand their rights and obligations under the Bankruptcy Code.