Bankruptcy Law
Bankruptcy law is the law codified in order to offer relief to the many aggrieved debtors in US. The bankruptcy law offers relief to individuals and to corporate entities.
Bankruptcy law offers relief to many aggrieved debtors. There is a Federal Bankruptcy code and the Bankruptcy rules vary from state to state. Bankruptcy law is not a complicated area of law but if not applied properly then can lead to complication. There is Federal Bankruptcy Law and Local Bankruptcy Rules which varies from state to state which governs bankruptcy in US. Bankruptcy Law is the law which specifies the manner in which an individual or a business entity can discharge their debt obligations provided they satisfy the conditions set out in the Bankruptcy Code. The United States Code Title 11 contains the provisions regarding bankruptcy. But Title 11 is not the sole title which deals with bankruptcy provisions in USA. Titles 18, 26 and 28 of the United States code also contain provisions with regard to bankruptcy.
Title 11
Title 11 is the major source of bankruptcy legislation in United States. The title contains chapters regarding liquidation, adjustment of debts of a municipality, reorganization, adjustment of debts of a family farmer or fisherman with regular annual income, adjustment of debts of an individual with regular income and so on. There are mainly three chapters under the title and they are:
- Chapter 7: Liquidation
- Chapter 11: Reorganization
- Chapter 13: Adjustment of debt of the persons, having regular income.
Liquidation:
The process of liquidation helps a bankrupt person to have a fresh start. After filing the bankruptcy petition most of the debtor’s property will be sold off to raise the amount in order to pay off the creditors. If the value of the assets is more than the debt owed, the remaining amount will be paid to the debtor. Proceedings under this chapter start when the debtor files a voluntary petition. Once the Bankruptcy petition is filed before the bankruptcy court, there will be an automatic stay on the credit collection activities of the creditors. After the petition is filed in the bankruptcy court, a notice will be sent to all the creditors. After which a creditors meeting would be scheduled. After the creditors meeting, the case trustee would sell the assets of the debtor either at the auction or at he private transactions. Once the assets are liquidated, the trustee will deposits the amount in the bank account, along with any other amount accumulated from the legal suits and then the amount deposited will be distributed among the creditors.
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Will I lose all my assets if I file for bankruptcy
Chapter7 involves putting your assets up for liquidation to pay off your debts. You stand to lose some of your properties in exchange of your discharge. But under Chapter 7 some properties are exempt from bankruptcy estates, or total of all assets that can be sold off. The rules vary by states like some allows exempting certain kinds of assets, while others will allow exemptions up to a certain value.
Is credit counseling a mandatory requirement for bankruptcy filing
Before you are legally allowed to file for Chapter 7 bankruptcy, you will have to complete a credit counseling briefing with an agency listed in the registry of the US Trustees office. This is not an optional but is a mandatory requirement. Many bankruptcy cases have been thrown out as the petitions were not accompanied with the credit counseling certificate.
What is adversary complaint
In a bankruptcy case when an issue arises which cannot be solved by negotiation or by a simple motion heard by the judge, it sometimes becomes necessary to file an adversary complaint. For example; if the debtor wishes to pursue a creditor for abusing the bankruptcy, automatic stay or injunction, he can bring an adversary complaint. Similarly, if a creditor objects to whether a debt should be discharged, he can bring an adversary complaint.
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