Bankruptcy Law

What is bankruptcy? Bankruptcy is a federal statutory law, created to remedy the need for a basic structure of laws that cover the area of bankruptcy through out the United States. All bankruptcy cases are under taken by the United States bankruptcy courts, which is a branch of the district courts system.

What kind of bankruptcy is right for me? Bankruptcy covers a wide variety of proceedings. The most common form of bankruptcy is liquidation under a chapter seven filing. What is liquidation? Liquidation is the appointment of a trustee who will gather non-exempt properties of the debtor. They will then sell those properties and give the proceeds to the creditors. The other chapters of bankruptcy are a bit more complex. (chapter eleven, chapter twelve, and chapter thirteen). These types of bankruptcy allow the future earnings to pay of creditors. Also, we have chapter nine bankruptcy. Chapter nine bankruptcy is offered only to municipals. It is more like a reorganization then a liquidation. Chapter twelve and thirteen are very much the same except that chapter twelve is only available to farmers.

Are there any exceptions/loop holes? Some properties (equity in a home, equity in a car, tools of the trade, and some amount of personal effects) are exempt from being sold to pay bankruptcy debt. Personal effects with little value are exempt, because they do not promote any desirable economic result. Not all debts can be discharged under every chapter of bankruptcy. (taxes owed to federal, state or local government, support obligations, and government guaranteed student loans. The main purpose of bankruptcy is to ensure orderly and reasonable management of debt.