Bankruptcy Law: Codes and Procedures

The United States Constitution authorized Congress to enact Bankruptcy laws.  Congress enacted the "Bankruptcy Code" to help financially crippled Americans make a fresh start from burdensome debt.  The Bankruptcy Code has been amended several times since it was enacted in 1978. Learn about the most recent changes in our Guide to the New Bankruptcy Laws.  It is the standardized federal bankruptcy law that governs all bankruptcy cases.

The Federal Rules of Bankruptcy Procedure or Bankruptcy Rules along with the local bankruptcy laws of each jurisdiction govern the process in each judicial district in the country.  These rules outline the official forms for each case and define the legal procedures to be applied to each specific problem of debt for individuals and businesses.

The bankruptcy judge makes all the decisions on any bankruptcy case before him/her.  That includes the eligibility of the debtor to file for bankruptcy, or whether a debtor is entitled to receive discharge of his/her debt. However, the judge appoints a trustee to oversee this administrative process and most bankruptcy cases are heard away from the courthouse.

Bankruptcy law includes six different chapters for filing bankruptcy, they are:

  • Chapter 7 - Liquidation under the Bankruptcy Code
  • Chapter 9 - Entitled Adjustment of Debts of a Municipality
  • Chapter 11 - Reorganization under the Bankruptcy Code
  • Chapter 12 - Family Farmer or Family Fisherman Bankruptcy
  • Chapter 13 - Individual Debt Adjustment
  • Chapter 15 - Entitled Ancillary and Other Cross-Border Cases

Typically, a person filing for chapter 7 does not have to appear before a bankruptcy judge unless an objection is raised in that debtor’s case.  A person filing for chapter 13 normally only has to appear before the bankruptcy judge at a plan confirmation hearing.  In general, the only time a debtor ahs to appear before a bankruptcy judge is for a 341 meeting (meeting with creditors).

Over one million Americans file for some sort bankruptcy every year and the number is not expected to go down anytime soon in these economically difficult times.  Bankruptcy law allows many American families the opportunity to rebuild their lives.  A knowledgeable bankruptcy attorney can help your family make a fresh start by taking advantage of the opportunity provided by the U.S. government for a second chance.

 

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