- 1). Get consent. A bankruptcy can be stopped on a motion showing consent among the parties that the proceeding should be dismissed. It's highly unlikely the creditors will agree to dismiss the bankruptcy, however, unless you make at least some payment and enter into some negotiated payment plan.
- 2). Get dismissal for improper venue. Bankruptcy is usually filed in the jurisdiction of the debtor's residency. If the involuntary petition was filed in an improper venue, it can be dismissed by the judge. This, however, tends at best to only delay the inevitable.
- 3). Change the chapter. A bankruptcy can be dismissed on motion showing the debtor cannot be ruled under the chapter (e.g., 7, 11 or 13) specified in the petition. This usually applies to farmers or other specialized kinds of business or individuals who qualify for Chapter 7. While this probably won't resolve the issue, it can stop bankruptcy from proceeding under an unfavorable chapter.
- 4). Show insufficient claim. An involuntary bankruptcy can only be filed if the aggregate claims against the debtor are more than $10,000 above any secured debt held against the debtor.
- 5). Argue bad faith. Courts do not permit involuntary bankruptcy to act as an aggressive form of debt collection and have dismissed cases where the intent of the filers was in bad faith and not supported by law. Bankruptcy is not intended to be used to drive a debtor out of business, to gain leverage over other creditors or in lieu of other collection methods. Showing any of these intentions on the part of the creditors can halt an involuntary bankruptcy.
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