What is the difference between a voluntary and involuntary bankruptcy filing?

In the state of Washington, a voluntary bankruptcy filing is one that is initiated by the debtor, whereas an involuntary bankruptcy filing is initiated by creditors who are owed money by the debtor. A voluntary bankruptcy filing is initiated by the debtor filing a petition in the bankruptcy court to start the process. This is usually done with the help of a bankruptcy lawyer, who helps the debtor to prepare a financial statement and other documents, and to determine the type of bankruptcy that is most appropriate for the debtor’s situation. In contrast, an involuntary bankruptcy filing is initiated by the creditors of a debtor, rather than by the debtor itself. In Washington, creditors must file an involuntary petition in the bankruptcy court to start the process. During an involuntary bankruptcy, the creditors are in control of the bankruptcy process and can generally be more aggressive in their attempts to collect on the debt. The difference between a voluntary and an involuntary bankruptcy filing is important, as the type of filing chosen by the debtor impacts the bankruptcy process, the outcome of the bankruptcy, and the debtor’s financial life afterwards. For instance, a voluntary bankruptcy filing generally affords the debtor more protection than an involuntary bankruptcy. The debtor is allowed to discharge eligible debts and keep legal control of their financial affairs, whereas with an involuntary bankruptcy, the creditors are in control and may be able to obtain a court order to seize the debtor’s property.

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What is the difference between a voluntary and involuntary bankruptcy filing?

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