The difference between voluntary and involuntary bankruptcy processes are presented in the way they legally start. From the legal point of view, the bankruptcy will be considered as voluntary or involuntary depending on who starts the process: The debtor or the creditors.

1. A couple
considerations
on voluntary
and involuntary
bankruptcy
By Suzzanne UhlandImage courtesy of Matthias Zomer at Pexels.com

2. A curious issue regarding bankruptcy cases in our
days is that, precisely, it is a matter decided
deliberately by those who file for it. The best way
to interpret this phenomenon is that behind the
requests for protection there is usually a series of
deliberate actions to start a bankruptcy process.
Of course, that's not how it should be, but it is
what it is. It could be seen from another
perspective, of course: The way in which people
relate to the very concept of bankruptcy has to
do with the romantic idea of ​​consumers to start
from scratch in the land of freedom.

3. Postmodernists like Zygmunt Bauman would say
that this is evidence of 'liquid modernity,' in which
there is a great concern for fixed processes
which remain immutable for a long time, as it
used to be in the past. People today are not in
favor of final decisions because they are
accustomed to the frenetic pace of this era of
much faster changes. A vast majority of people
seem to be sufficiently committed to nothing, not
even to their businesses. In that sense, voluntary
bankruptcy is a phenomenon of liquid
modernity; and those who consider it as an
option, think that the purpose of the very
concept of bankruptcy is to open new windows
of opportunity to get ahead.

4. Now, it is still possible to talk about bankruptcies
that have not been decided in advance.
Moreover, it is possible to speak of involuntary
bankruptcies in which the creditors are the ones
behind the process. Even to complicate the
picture a bit more, it is possible to speak of
bankruptcy proceedings initiated against
debtors, and not even by their creditors, but by
third parties. The natural question behind this
question is why this happens, and perhaps the
answer is more complex than the question
because it is rooted in sociological problems
that, in turn, would extend the subject of this post
much more.

5. These strange cases are not very common, of
course. However, it is important to delve into
them, especially in terms of the pros and cons
that imply on the fly for those who consider them
as a viable option. The first thing to say about this
matter is that there are a number of conditions
for a bankruptcy petition of this nature, and that
they must be carefully observed.
Read also: How to invest in 2018 and avoid
bankruptcy, by Suzzanne Uhland

6. First, the legal mechanisms that have been
arranged to regulate these figures are found in
the bankruptcy code, between the seventh and
eleventh chapters. Secondly, the process of
involuntary bankruptcy can be initiated
practically against anyone (this includes, of
course, any business), except in cases indicated
by law, related to matters of protectionist interest
of the State for economic policy issues. On the
other hand, if the creditors exceed a dozen, at
least three of them must be included in the
involuntary bankruptcy petition. In the same
way, these types of requests are only viable in
case the debtor is in default of paying his or her
obligations.

7. The difference between voluntary and
involuntary bankruptcy processes are presented
in the way they legally start. From the legal point
of view, the bankruptcy will be considered as
voluntary or involuntary depending on who starts
the process: The debtor or the creditors.
Usually, it is the debtor who decides to declare
bankruptcy. This happens when it is foreseen that
in the months following his or her obligations in
default, he or she will not be able to face the
regular or extraordinary debts of the business,
and, therefore, decides to declare bankruptcy.

8. As mentioned above, the idea of ​​this is to close a
negative stage, so that the entrepreneur can
start from scratch, without debts. To apply for
voluntary bankruptcy, it is necessary that neither
the debtor nor a creditor has filed for bankruptcy
before the courts, and that the debtor
requesting the voluntary liquidation is in a
notorious insolvency state.
All this leads us to think about why business is
breaking at such a vertiginous pace lately. The
truth is that most entrepreneurs and owners of
small businesses find the causes mainly outside
the company and especially in the
political-economic environment.

9. In general, beyond the policies of the current
government, the swings of the economy of the
region or the motivations of the new generations
of employees, there is something that causes
some companies to fail but others continue to
grow and even become in large companies.
The common problem that is observed in small
businesses is the lack of professionalization. This
makes it necessary a more serious approach of
the company to achieve the quality of the
product and service it offers, standardization in
the operations, an improvement in the
management of the employees, greater control
of the inputs and their suppliers, planning of the

10. actions , analysis of the results and finally, a
review of the leadership of the owners. Unlike
what happens in large companies, which have
directories and various advisors, the survival of
the company is strongly related to the owner's
knowledge.
Recommended: Voluntary and Involuntary,
Individual and Joint Bankruptcy Cases