| Bankruptcy and Bankruptcy Laws |
Bankruptcy law is governed by federal law. It contains the
provisions that make up current bankruptcy law. Individual
states may not regulate bankruptcy. Bankruptcy proceedings
are handled in the United States Bankruptcy Courts.
There are two basic types of bankruptcy: Chapter 7
Bankruptcy and Chapter 13 Bankruptcy (11, 12, & 13 are
similar but are specific to businesses, farms and individual or
families. We will only discuss Chapter 13 bankruptcy). Chapter
7 Bankruptcy is usually referred to as liquidation. A trustee is
appointed who liquidates the debtor's assets and distributes
the proceeds to creditors. Chapter 13 Bankruptcy is aimed at
rehabilitating the debtor to allow him to use future earnings to
pay creditors with the protection of the government.
provisions that make up current bankruptcy law. Individual
states may not regulate bankruptcy. Bankruptcy proceedings
are handled in the United States Bankruptcy Courts.
There are two basic types of bankruptcy: Chapter 7
Bankruptcy and Chapter 13 Bankruptcy (11, 12, & 13 are
similar but are specific to businesses, farms and individual or
families. We will only discuss Chapter 13 bankruptcy). Chapter
7 Bankruptcy is usually referred to as liquidation. A trustee is
appointed who liquidates the debtor's assets and distributes
the proceeds to creditors. Chapter 13 Bankruptcy is aimed at
rehabilitating the debtor to allow him to use future earnings to
pay creditors with the protection of the government.
Bankruptcy law allows for the development of a plan that gives the debtor an opportunity to resolve large
amounts of debt through the division of assets among interested creditors. This division treats the
creditors with a degree of equality. Certain proceedings allow a debtor to remain in business and use
generated revenue and future income to resolve debts.
Bankruptcy also allows debtors to be free from their debts or for them to be discharged. After the assets
are distributed the debtor can be discharged from past financial obligations even if all of the creditor's
debts have not been completely paid. The debtor is given financial relief while the creditor is given a
sense of certainty as to the amount and time of payments. This sounds scary…but in the vast majority of
Bankruptcy cases, the debtor does not lose any assets.
amounts of debt through the division of assets among interested creditors. This division treats the
creditors with a degree of equality. Certain proceedings allow a debtor to remain in business and use
generated revenue and future income to resolve debts.
Bankruptcy also allows debtors to be free from their debts or for them to be discharged. After the assets
are distributed the debtor can be discharged from past financial obligations even if all of the creditor's
debts have not been completely paid. The debtor is given financial relief while the creditor is given a
sense of certainty as to the amount and time of payments. This sounds scary…but in the vast majority of
Bankruptcy cases, the debtor does not lose any assets.
 | |  | |  | |  | |  | |  |