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Bankruptcy Law Explained
The Structure of Bankruptcy Laws
[You do not need to study bankruptcy laws or to
review this section if you have chosen to have us
prepare your bankruptcy for you.]
Index:
 Bankruptcy Law Summary
Chapter 7
bankruptcy laws
Chapter
13 bankruptcy laws
Property
and Exemptions
Structure of bankruptcy laws
Case
administration
Types of
bankruptcy
How to
file bankruptcy
The Code
Bankruptcy laws are part of the Federal body of laws
collectively referred to as the United States Code and
are contained in Title 11 of the code. Title 11 is
broken down into chapters with each chapter dealing with
a specific area or bankruptcy law. Most of the Chapters
are general and define the overall operation of the
system and others define specific types of bankruptcies.
Chapters 7, 11 and 13 define types of bankruptcies and
are therefore more familiar to the public.
Federal Bankruptcy Courts
Under the United States constitution, the Federal
government is composed of three branches, the executive,
headed by the president, the legislative, composed of
the House and the Senate and the judiciary, composed of
various Federal courts. In the bankruptcy process, all
three branches of government are involved to some
extent. The Congress of the United States enacts
bankruptcy laws, the Department of Justice, an arm of
the executive, administers it and the bankruptcy courts
supervise the process and interpret the law. The United
States is divided into Federal Districts. These
districts represent Federal court regions and it is in
these districts that bankruptcy is administered. In some
districts, there are bankruptcy courts and in others,
bankruptcy is handled by the district court themselves.
Chapter 1
Chapter 1 of the code deals with the general
provisions of the bankruptcy code. Section 101 defines
the terms used in the code. What is an attorney? What is
a claim? What is a consumer debt? What is a creditor?
These terms all seem self-evident but the law does not
leave them undefined. Conceivably, the definition of a
common term could come into dispute and to avoid this
bankruptcy law starts out with a definition of terms.
What is an individual with regular income? Section 101
defines it by saying, "individual with regular income"
means individual whose income is sufficiently stable and
regular to enable such individual to make payments under
a plan under Chapter 13 of this title, other than a
stockbroker or a commodity broker.
If you were filing under Chapter 13, you would have
encountered the term, "individual with regular income"
and chances are that you would be hard pressed to find
this definition anywhere on the Internet. Now you know
where to find a definition of this term and the
definitions of any other terms that you will encounter
in a personal bankruptcy.
Chapter 1 also deals with many other issues of
general applicability to bankruptcy law. For example,
Section 103 lays out which chapters of the code apply to which
types of bankruptcies, Section 105 defines the power of
the court, Section 107 specifies that with few
exceptions, any documents that you file in a bankruptcy
case are public records and open to examination of any
party without a charge. So how much does it cost to view
the bankruptcy court file of that big corporation that
filed bankruptcy last month? The answer is nothing.
Other important areas of Chapter 1 are Section 10,9 which
defines who may file bankruptcy.
Chapter 3
Chapter 3 of the code is of importance to everyone
filing bankruptcy because it applies to every bankruptcy
case and it defines the roles of all the parties
involved from the judges to the trustees and and
creditors. Most importantly, it defines the bankruptcy
process and the efficacy of filing bankruptcy. Chapter 3
is perhaps the most important chapter in all of the
code.
Section 301 through 307 define voluntary and involuntary
filings, joint bankruptcies, and the procedure for
starting a bankruptcy case.
Sections 321 through 331 creates trustees and defines
their powers. It also defines the role of attorneys and
other professionals in the bankruptcy process. Who much
can your attorney charge you? Who pays the trustee and
how can one become a trustee? These are some of the
areas covered in this section.
Sections 341 through 350 deal with such issues as the
meeting of creditors, sending of court notices, the
fifth amendment to the constitution barring
self-incrimination, conversion from one type of
bankruptcy to another, dismissing and closing cases.
Sections 361 to 366 deal with the automatic stay, using,
selling or leasing property while in bankruptcy,
borrowing money while in bankruptcy and the rights of
your utility company.
From a consumer perspective, the bankruptcy code is
one of the most powerful set of laws in the United
States and Section 362 can be credited for this. This
section covers the Automatic Stay which essentially says
that form the moment you file bankruptcy, every hostile
action by your creditors against you must stop.
Chapter 5
Chapter 5 of the code is another important part of
the code. You can consider it as the plumbing of the
bankruptcy code because it deals with the detail laws
that tie everything together. It covers such areas as
what is a secured or unsecured debt, the debtor's
duties, exemption or property laws, the effect of a
discharge, what types of debts cannot be discharged,
discrimination, what is property of a bankruptcy estate,
the trustee's powers to seize property and much more.
Chapter 7
Unlike the preceding chapters, Chapter 7 of the code
defines a type of bankruptcy known as Liquidation. This
is the popular Chapter 7 under which most bankruptcies
are filed. This chapter is divided into four
subchapters. Subchapter 1 deals with the duties of the
trustee as applied to a filing under Chapter 7,
Subsection II deals with collection, liquidation and
distribution of the bankrupt estate, Subchapter III
deals with stockbroker liquidation and subchapter IV
deals with commodity broker liquidation.
Subchapter II (Section 721 through 728) is of
particular importance to debtors because it deals with
your right to operate a business while in bankruptcy,
redemption of property, rights of partnerships,
treatment of certain liens, disposition of property, the
discharge of debts and certain tax provisions.
Get
Details - Chapter 7 Bankruptcy Laws
Chapter 9
Chapter 9 of the code deals with the bankruptcy of a
municipality. This is not of much interest to debtors
and so will not be discussed in detail. If you are a
contractor owed money by a bankrupt city or county
government, you will want to read Chapter 9 of the code.
Chapter 11
Chapter 11 of the code like Chapter 7, defines a type
of bankruptcy filing. It is known in the code as
Reorganization. This is the type of bankruptcy that
corporations and large business file when they want to
continue operating their business while getting debt
relief. Theoretically, individuals can file Chapter 11
but hardly any of them do.
Chapter 11 is a very complicated type of bankruptcy
and it usually requires the assistance of a team of
attorneys and accountants. The initial documents
required to file a Chapter 11 bankruptcy care pretty
much the same as for a Chapter 7. It is the
post-petition process and documentary requirements that
are overwhelming.
Chapter 12
Chapter 12 of the code can be thought of as the
Chapter 13 bankruptcy of the family farmer and since so
few people file under Chapter 12, we shall skip a
detailed discussion of it.
Chapter 13
Chapter 13 of the code defines a type of bankruptcy
referred to in the code as Adjustment of Debts of an
Individual With Regular Income. This is the second most
popular type of bankruptcy filing and is used by
individuals and married couples who want to repay their
debts in an orderly court supervised fashion. Since
Chapter 13 bankruptcy is characterized by a repayment
plan, this chapter deals mostly with the Plan.
Sections 1301 to 1307 deals with such issues as
rights of co-debtors, the trustee, the debtor's right to
engage in business and the conversion and dismissal of
cases.
Sections 1321 to 130 deal with the repayment plan and
covers filing the plan, contents of the plan,
modifications, the confirmation hearing, plan payments,
and a discharge of unpaid debts.
Get
Details - Chapter 13 Bankruptcy Laws
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