Question

Unger owes a total of $50,000 to eight unsecured creditors and one fully secured creditor. Quincy is one of the unsecured creditors and is owed $6,000. Quincy has filed an involuntary bankruptcy petition against Unger under the liquidation provisions of Chapter 7 of the Federal Bankruptcy Code. Unger has been unable to pay debts as they become due. Unger's liabilities exceed Unger's assets. Unger has filed papers opposing the bankruptcy petition.

Which of the following statements regarding Quincy's petition is correct?
A. It will be dismissed because the secured creditor failed to join in the filing of the petition.
B. It will be dismissed because three unsecured creditors must join in the filing of the petition.
C. It will be granted because Unger's liabilities exceed Unger's assets.
D. It will be dismissed because Unger's debt to Quincy alone is less than the required limit to bring an involuntary petition

Answer 1

Answer:

D) It will be dismissed because Unger's debt to Quincy alone is less than the required limit to bring an involuntary petition

Explanation:

In order for Quincy's petition to succeed, his claim must exceed the minimum amount required, and it doesn't.

If a debtor wants to file an involuntary bankruptcy petition, the debtor's claim must equal or exceed $13,425. Since Unger's debt to Quincy is only $6,000, Quincy cannot file the petition by himself. Maybe if he joins other creditors, their claims can exceed the minimum threshold required.