FILING BANKRUPTCY INFORMATION
This bankruptcy information page
provides basic bankruptcy information about bankruptcy law, filing
bankruptcy, bankruptcy court and the bankruptcy code, with emphasis on and
links to the important chapters of the bankruptcy code and
other related bankruptcy law topics,
such as: bankruptcy chapter 7,
chapter 11 bankruptcy,
chapter 13 bankruptcy
as well as
Nondischargeable Debts.
A bankruptcy proceeding (simply called
BANKRUPTCY), is initiated at the instance of the bankrupt debtor or
by any interested party by filing bankruptcy in a bankruptcy court
(court having jurisdiction to accept filing bankruptcy and authority
to hear the bankruptcy petition). Bankruptcy is a proceeding in a federal court in which an insolvent debtor's assets are liquidated and the
bankrupt debtor is relieved of further liability.
Bankruptcy occurs when the liabilities
or debts of an individual business entity or firm exceed their assets or revenues
over an extended period of time. When individuals or firms declare
bankruptcy or from the time of filing bankruptcy in the bankruptcy
court their assets are taken and allocated to various creditors in
accordance with the bankruptcy code or bankruptcy law, and
bankruptcy courts may impose restrictions on the bankrupt company's
future borrowing capacities.
Bankruptcy law and filing bankruptcy is mainly governed by the Bankruptcy Code (Title 11, U.S.
Code), which is a matter of federal law. Thus the bankruptcy
code/bankruptcy law is the same in
every state. When federal bankruptcy law/bankruptcy code conflicts with state law,
federal bankruptcy laws and the bankruptcy code control. The most common provisions of the Bankruptcy
Code/bankruptcy law are those about
Bankruptcy Chapter 7,
Chapter 11 Bankruptcy, and
Chapter 13 Bankruptcy, which
provide for the development of a plan that allows a bankrupt debtor, who is
unable to pay his creditors, to resolve his debts through the
division of his assets among the creditors of the bankrupt debtor.
This supervised division also allows the interests
of all creditors to be treated with some measure of equality.
Certain bankruptcy allow a debtor to stay in business and use
revenue generated to resolve his or her debts. An additional purpose
of bankruptcy law/bankruptcy code is to allow certain debtors to free themselves (to
be discharged) of the financial obligations they have accumulated,
after their assets are distributed, even if their debts have not
been paid in full.
Filing bankruptcy
information & bankruptcy courts
Bankruptcy law and bankruptcy code seek to afford opportunity to a person, who is
suffering bankruptcy - hopelessly burdened with debt - to free himself of the debt and start
anew. The bankruptcy law and bankruptcy code seek to find a sound remedy whereby the
bankrupt debtor can
comfortably meet his monthly obligation, at the same time allowing
the creditors to recover their investment. Filing bankruptcy then
benefits both the debtor and the creditor. But the main reason for
filing bankruptcy and the main emphasis of the bankruptcy code and bankruptcy law however is on rehabilitating the debtor (reorganization) who is in distress.
Note: Generally, if there are no assets that a
judgment creditor can attach, as when debtor's assets are exempt,
there is no need for filing bankruptcy.
Who may initiate filing bankruptcy?
To supervise the assets of the debtor, filing bankruptcy
can either be made voluntarily by a debtor or initiated by
creditors. After a bankruptcy proceeding has been filed, the
creditors, may not seek to collect their debts outside of the
proceeding, and the debtor is not allowed to transfer or alienate in
any manner property or any portion thereof that has
been declared part of the estate subject to bankruptcy proceedings.
Bankruptcy liquidation and reorganization
Generally, bankruptcy is divided into two main groups,
liquidation bankruptcy
and
reorganization bankruptcy.
Liquidation
bankruptcy
Liquidation is governed by
bankruptcy chapter 7 of
the Bankruptcy Code/bankruptcy law, which calls for a complete liquidation of all
the non exempt assets of the debtor, in exchange for discharge of
debts. Filing bankruptcy chapter 7 is the fastest and the most common bankruptcy
under the bankruptcy code or bankruptcy law.
Reorganization
bankruptcy
The
most common reorganization bankruptcy in the bankruptcy
law/bankruptcy code are
chapter 11
bankruptcy
and
chapter 13 bankruptcy. The bankrupt debtor with secured debts under
$871,550 and unsecured debts below $269,250 can choose filing
bankruptcy under chapter
13 bankruptcy. If the debts exceed the chapter 13 filing bankruptcy limits, the debtor may file a
chapter 11 bankruptcy.
However, chapter 11
bankruptcy has many drawbacks despite it being the most flexible
bankruptcy. Filing bankruptcy chapter 13 is also
expensive, confusing, time-consuming and has a low success rate of
only ten percent (10%).
All reorganization bankruptcy require the filing of
a plan of reorganization with the bankruptcy court, which must
contain a proposal of how you are going to repay your creditors.
Back to Top
|