Bankruptcy Law

Bankruptcy law is designed to benefit both debtors and creditors by seeing that debtors get relief from debts they can’t pay, and that creditors get paid from whatever assets the debtor can spare and the debtor can obtain a fresh start. Bankruptcy is governed by the federal law found in Title 11 of the United States Code. As federal law, it supersedes any conflicting state law, so, with the exception of exemptions, bankruptcy law is the same from state to state.

Bankruptcy Chapters

  • Chapter 7 – allows the bankrupt individual to retain essential property (the most common form of Bankruptcy, but not always the best.)
  • Chapter 11 – aka Business Bankruptcy or Over-Limits for Chapter 13 (most expensive) – most large companies reorganize under Chapter 11.
  • Chapter 12 – aka Farmers bankruptcy is a simplified reorganization for family farmers, where the debtor retains his property and pays creditors out of future income.
  • Chapter 13 – a type of repayment plan where the bankrupt individual can keep some of their assets.

Bankruptcy Process

Chapter 7 Bankruptcy is the most common form of bankruptcy. It is a liquidation proceeding in which the debtor’s non-exempt assets, if any, are sold by the Chapter 7 trustee and the proceeds distributed to creditors. Individual debtors typically get a discharge within 4-6 months of filing the case. Assets that are non-exempt are taken over by the trustee, who sells them and pays creditors as much as the proceeds permit. Any wages the debtor earns after the case is begun are the debtor’s, and the creditors have no claim on those earnings. A bankruptcy attorney can advise you regarding which of your assets will be exempt from liquidation, and what you can expect for the future.

Chapter 13 is a repayment plan for individuals with regular income, unsecured debt less than $336,900, and secured debt less than $1,010,650. The debtor keeps his property and makes regular payments to the Chapter 13 trustee out of their future income to pay off their creditors over time (typically 3-5 years). Repayment in Chapter 13 can range from 1% to 100% depending on the debtor’s income and the type of the debt. Chapter 13 also provides a way for bankrupt individuals to avoid foreclosures and repossessions. In certain circumstances, debtors can reduce the balance of loans on vehicles and discharge second mortgages or home equity lines of credit. It is not recommended that you file bankruptcy without the assistance of an attorney, as the bankruptcy process is complex. Based on the factual and legal complexity of your case, a qualified bankruptcy attorney will be able to offer you a customized solution to your situation.

Related Posts
How to deal with your business debts
Around 90 percent of businesses fail before they even reach ten years. And in this challenging economy, it would be normal if your business would dwindle down to failure. This ...
READ MORE
Chapter 11 protection in favor of Molycorp Inc.
If a company or an organization is unable to repay its creditors or keep its business alive, the debtor under the norms and rules can file for the Chapter 11 ...
READ MORE
Zoning laws – Avoid Zoning trouble
The primordial rule for business location is to never sign a lease for a business zone or space if you are not yet completely sure that you are legally allowed ...
READ MORE
bankruptcy court
The United States is among the first country in the world that has the bankruptcy courts. They are first country to have a humane view of the person who has ...
READ MORE
Open container violation
While driving your car, you are not allowed to have any alcohol containers, such as bottles and cans, that have been opened, having broken seal, nor had its content partially ...
READ MORE
How landlords can check a tenant’s credit report?
There are private credits reporting agencies that collect credit files and other consumer information and sell them. Landlords can get the credit report of their tenants through these agencies. Landlords ...
READ MORE
Child Abuse
Kid misuse is the actual, sex-related or emotional maltreatment or ignore of kids or kids. In the United States, the Centers for Disease Control and Prevention (CDC) and the Department ...
READ MORE
How to Deal With Zoning Problems?
Right location is an important factor to running a successful business. A strategic location can give you the right customers and publicity. You may find the right location perfect for ...
READ MORE
How to file for Chapter 11 bankruptcy?
The gorgeous $3.5 billion paradisiacal mega resort Baha Mar is in the news again. Since its construction initiated, there are travelers waiting for it to start. However, it seems this ...
READ MORE
Help with divorce cost
Divorce is anyway not a very pleasant experience. And when you consider the emotional, physical and financial trauma two of them undergo, it is really tedious to deal with it. ...
READ MORE
How to deal with your business debts
Chapter 11 protection in favor of Molycorp Inc.
Zoning laws – Avoid Zoning trouble
Bankruptcy courts
Open container violation
How landlords can check a tenant’s credit report?
Child Abuse
How to Deal With Zoning Problems?
How to file for Chapter 11 bankruptcy?
Help with divorce cost