Bankruptcy Law - Chapter 7, 11, 13
What is Bankruptcy? Bankruptcy allows individuals, couples, and businesses that cannot meet their financial obligations to be excused from repaying some or all of their debt. Bankruptcy has been in existence since ancient times. In the United States, the rules and procedures for filing bankruptcy are governed by federal law. States are prohibited from legislating in this area of the law. Generally speaking, there are two types of bankruptcy. In a liquidation bankruptcy, debtors must surrender their property, which is sold, and the proceeds distributed to creditors. In return, all debts are permanently discharged. In a reorganization bankruptcy, debtors are allowed to keep their property. But the debtors must agree to an installment plan to repay creditors a portion of the amount they owe. Filing for bankruptcy involves submitting a petition and fee to the bankruptcy court. The fee is close to $300 for most personal bankruptcies. The petition will contain sworn statements by the debtors concerning the amount of money they owe, their income and expenses, as well as a complete list of all of their assets. After filing, a court hearing is held to review the information in the petition. Chapter 7 bankruptcies are by far the most common. These are liquidation bankruptcies in which the debtors must turn over all “non-exempt” property to a supervising officer known as the bankruptcy trustee. Property is exempt if it falls within specific categories of assets that debtors are allowed to keep, such as a certain amount of clothing, household items, tools for work, and in some instances, vehicles and the family home. The Chapter 7 trustee will take the debtor’s non-exempt property (if there is any), and sell it. The money will be paid to the debtor’s creditors. This may result in creditors receiving a small fraction of their claims. The balance of the debtor’s loans and obligations are forgiven and can never be collected. Creditors who attempt to collect debts that have been discharged face severe penalties under federal law. Keep Your Property The fact that a liquidation bankruptcy wipes out debt completely is obviously attractive to anyone who cannot afford to pay their bills. But what about people who have non-exempt property that they do not want to give up? Chapter 13 is a reorganization bankruptcy. It allows debtors to keep their property by agreeing to make monthly payments toward their debt over the course of three to five years. Chapter 13 bankruptcies offer a number of benefits besides allowing debtors to keep their property. For example, certain types of secured debt, like a car loan, can be restructured by reducing principal to the market value of the collateral, and lowering payments by extending the repayment period to 60 months. Other obligations, like mortgages, student loans, and tax liabilities can be modified as well. Creditors are given no choice in the matter. Bankruptcy is not available to everyone. Those who have had their debts discharged in a Chapter 7 within the past eight years cannot re-file. For Chapter 13, the waiting period is six years. Too much disposable income is also a problem. Congress has established a “means test” for this purpose. Debtors who make enough money to repay their creditors will be barred from filing a liquidation bankruptcy, though reorganization may be an option. Businesses that have become insolvent but want to stay in business may be able to file a Chapter 11 bankruptcy. Like a personal reorganization, Chapter 11 allows businesses to obtain protection from their creditors while they put together a repayment plan. Liabilities can be reduced and restructured to give the business another chance at achieving profitability. Whether a debtor is considering filing under Chapter 7, 11, or 13, they must comply with a vast number of federal laws and regulations. An error at any step of the process can result in the court refusing to discharge the debtor’s liabilities. When the bankruptcy process ends this way, the consequences are disastrous. With so much at stake, hiring a licensed bankruptcy attorney at the outset is wise investment.
Know Your Rights!
- Common Questions About Bankruptcy
Bankruptcy is a legal proceeding that helps some people who cannot pay their bills get a fresh financial start by temporarily, or permanently, preventing creditors from collecting debts from you.
- Different Types of Bankruptcies in America and the Bankruptcy Abuse Prevention and Consumer Protection Act
The law provides a mechanism for getting out of control debts back under control, either by restructuring debt or wiping out certain types of obligations. This is bankruptcy.
- Stuck With Unaffordable Student Loans, Now What?
Every year, millions of students are convinced to take on student loans with promises of huge salaries upon graduation, but often the reality is a bit different and these same students are left with an enormous debt and little or no means of repayment.
- What is the Difference Between Chapter 7 and Chapter 13 Bankruptcy?
What is the difference between a Chapter 7 and a Chapter 13 bankruptcy? The answer can have profound repercussions on your case.
- What Kinds of Debts are Discharged in Bankruptcy?
While most debts can be wiped out in Chapter 7 bankruptcy, some cannot. Understanding which debts can and cannot be discharged in bankruptcy can be an important consideration in deciding whether to file for bankruptcy.
Articles About Bankruptcy Law
- Ways to Stop ForeclosureThere are several ways that homeowners can help guard against foreclosure so that they can keep their homes and avoid the negative consequences of this action.
- Perfecting Your Security Interest – Requirements for Listing a Debtor’s Name on Florida Article 9 FilingsFlorida lenders seeking to secure a lien against the personal property of a borrower in default must follow the guidelines detailed in Article 9 of the Uniform Commercial Code (UCC) and Florida’s Article 9, which governs secured transactions and is applied to a wide range of consumer and commercial credit transactions.
- Deciding between Chapter 7 and Chapter 13 BankruptcyMany individuals who file bankruptcy file under the specific chapter that they qualify for. If they are not eligible for one filing, they explore the other. However, some people fall into multiple eligibilities and determine which bankruptcy filing will better suit their needs.
- What Bankruptcy Can and Cannot DoMillions of underwater debtors including individuals and businesses have turned to bankruptcy for relief. While bankruptcy is a powerful way to shield debtors from further debt collection efforts, it does not solve all financial problems. Additionally, there are different things that bankruptcy can accomplish based on the type of bankruptcy that is filed.
- What Not to Do Before BankruptcyBankruptcy laws are often complex in nature and some filers make mistakes before they ever file their petition at the courthouse. Making certain mistakes may have an adverse effect on bankruptcy or even prevent someone from qualifying for bankruptcy. Some mistakes to avoid include:
- Three Benefits of Chapter 7 BankruptcySome of you may be at a point in your life when you are considering bankruptcy. If so, you may be wondering why a Chapter 7 Bankruptcy may be better for you. Some of the advantages to filing a Chapter 7 bankruptcy are as follows:
- Defending a Debt Collection LawsuitIf a person owes money to a creditor, the creditor or debt collection company may commence a debt collection lawsuit against the debtor. If the creditor secures a judgment, it can then take steps to collect on it through garnishment or attaching a lien on the debtor’s unexempted property. There are often several ways that a debtor can avoid these negative results, including the following:
- What Happens in a Debt Collection Lawsuit?Debt collection companies are often given a specific protocol to follow when collecting debts. Their owners may set out specific rules for these transactions. Additionally, federal and state laws often impose additional requirements regarding the collection of debt.
- What is the Role of a Bankruptcy Attorney?Bankruptcy is a complex procedure that requires you to make a host of critical decisions from before the time you file straight through to the time your debts are discharged and the bankruptcy procedure concludes. An experienced bankruptcy attorney can guide you through the dizzying maze of decisions, paperwork and procedure that marks a bankruptcy filing, whether it is a chapter 7 or chapter 13.
- New CFPB Rules and the Impact on Hard Money LendingHard-money lending is becoming more popular in the mortgage industry as real estate investors try to find new ways to take advantage of opportunities quickly by accessing this source of liquid capital. In addition, as interest rates rise, hard money lending becomes a way for investors to close deals faster.
- All Debtor and Creditor Law Articles
United States Bankruptcy Courts
- Alabama Middle Bankruptcy Court
- Alabama Northern Bankruptcy Court
- Alabama Southern Bankruptcy Court
- Alaska Bankruptcy Court
- Arizona Bankruptcy Court
- Arkansas Eastern & Western Bankruptcy Court
- California Central Bankruptcy Court
- California Eastern Bankruptcy Court
- California Northern Bankruptcy Court
- California Southern Bankruptcy Court
- Colorado Bankruptcy Court
- Connecticut Bankruptcy Court
- Delaware Bankruptcy Court
- District of Columbia Bankruptcy Court
- Florida Middle Bankruptcy Court
- Florida Northern Bankruptcy Court
- Florida Southern Bankruptcy Court
- Georgia Middle Bankruptcy Court
- Georgia Northern Bankruptcy Court
- Georgia Southern Bankruptcy Court
- Hawaii Bankruptcy Court
- Idaho Bankruptcy Court
- Illinois Central Bankruptcy Court
- Illinois Northern Bankruptcy Court
- Illinois Southern Bankruptcy Court
- Indiana Northern Bankruptcy Court
- Indiana Southern Bankruptcy Court
- Iowa Northern Bankruptcy Court
- Iowa Southern Bankruptcy Court
- Kansas Bankruptcy Court
- Kentucky Eastern Bankruptcy Court
- Kentucky Western Bankruptcy Court
- Louisiana Eastern Bankruptcy Court
- Louisiana Middle Bankruptcy Court
- Louisiana Western Bankruptcy Court
- Maine Bankruptcy Court
- Maryland Bankruptcy Court
- Massachusetts Bankruptcy Court
- Michigan Eastern Bankruptcy Court
- Michigan Western Bankruptcy Court
- Minnesota Bankruptcy Court
- Mississippi Northern Bankruptcy Court
- Mississippi Southern Bankruptcy Court
- Missouri Eastern Bankruptcy Court
- Missouri Western Bankruptcy Court
- Montana Bankruptcy Court
- Nebraska Bankruptcy Court
- Nevada Bankruptcy Court
- New Hampshire Bankruptcy Court
- New Jersey Bankruptcy Court
- New Mexico Bankruptcy Court
- New York Eastern Bankruptcy Court
- New York Northern Bankruptcy Court
- New York Southern Bankruptcy Court
- New York Western Bankruptcy Court
- North Carolina Eastern Bankruptcy Court
- North Carolina Middle Bankruptcy Court
- North Carolina Western Bankruptcy Court
- North Dakota Bankruptcy Court
- Ohio Northern Bankruptcy Court
- Ohio Southern Bankruptcy Court
- Oklahoma Eastern Bankruptcy Court
- Oklahoma Northern Bankruptcy Court
- Oklahoma Western Bankruptcy Court
- Oregon Bankruptcy Court
- Pennsylvania Eastern Bankruptcy Court
- Pennsylvania Middle Bankruptcy Court
- Pennsylvania Western Bankruptcy Court
- Puerto Rico Bankruptcy Court
- Rhode Island Bankruptcy Court
- South Carolina Bankruptcy Court
- South Dakota Bankruptcy Court
- Tennessee Eastern Bankruptcy Court
- Tennessee Middle Bankruptcy Court
- Tennessee Western Bankruptcy Court
- Texas Eastern Bankruptcy Court
- Texas Northern Bankruptcy Court
- Texas Southern Bankruptcy Court
- Texas Western Bankruptcy Court
- Utah Bankruptcy Court
- Vermont Bankruptcy Court
- Virginia Eastern Bankruptcy Court
- Virginia Western Bankruptcy Court
- Washington Eastern Bankruptcy Court
- Washington Western Bankruptcy Court
- West Virginia Northern Bankruptcy Court
- West Virginia Southern Bankruptcy Court
- Wisconsin Eastern Bankruptcy Court
- Wisconsin Western Bankruptcy Court
- Wyoming Bankruptcy Court
Bankruptcy Law - US
- ABA - Bankruptcy
The American Bar Association, Division for Public Education maintains an online resource center covering a variety of legal topics including the ABA Guide to Credit and Bankruptcy. This section will help you understand the rules of the two major forms of personal bankruptcy and the other options that exist for those in financial straits.
- Bankruptcy - Overview
The Legal Information Institute offers a helpful overview of the bankruptcy process, as well as an excerpt from the Institute’s Plain-English Dictionary entry for bankruptcy.
- Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) - Wikipedia
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) is a bankruptcy reform law was passed in 2005. This web page provides a summary of the legislation.
- Bankruptcy Resources - Filing for Bankruptcy Without an Attorney
For an explanation of the dangers of filing for bankruptcy without an attorney, visit this web page published by the United States Courts.
- Chapter 11 Bankruptcy - Reorganization Under the Bankruptcy Code
Corporations, partnerships, and other businesses looking to file for Chapter 11 reorganization will benefit from this comprehensive description of the process.
- Chapter 13 Bankruptcy
The ABA website contains a series of articles devoted to Chapter 13, also known as the “wage earner’s bankruptcy.”
- Chapter 7 Bankruptcy - Liquidation Under the Bankruptcy Code
The official website of the federal courts includes this page about liquidation bankruptcies. Footnotes to relevant portions of the United States Code are provided.
- Department of the Treasury - Financial Stability Plan
Helping Americans achieve financial stability has been a priority of the federal government throughout the economic crises. This page describes actions taken by the Treasury Department to address the issue.
- Federal Reserve System - Troubled Asset Relief Program (TARP)
In the wake of the housing market collapse, Congress enacted the TARP program to bolster the U.S. banking industry. The program is outlined in this page published by the Federal Reserve.
- Federal Rules of Bankruptcy Procedure (2012)
Cornell University Law School maintains this searchable version of the bankruptcy rules. These rules apply to all bankruptcy cases in federal court.
- IRS - Bankruptcy Fraud
Bankruptcy fraud carries potential civil and criminal penalties. The Internal Revenue Service offers this brief overview of the steps their agency takes to deal with the situation.
- Means Testing - Census Bureau, IRS Data and Administrative Expenses Multipliers
The United States Department of Justice uses this web page to republish data from the Census Bureau and the IRS, so it can be accessed by potential bankruptcy filers when completing the Means Test.
- SEC - Corporate Bankruptcy
Securities investors need to understand what will happen to the value of their shares when a publicly-traded company files for bankruptcy.
- United States Bankruptcy Courts
The website of the United States Courts offers forms, rules, and other bankruptcy resources. This page also provides access to the Bankruptcy Basics informational video series.
- US Code - Title 11 - Bankruptcy
Title 11 of the United States Code contains the federal laws governing bankruptcy.
Organizations Regarding Bankruptcy Law
- American Bankruptcy Institute
- Bankruptcy Advice and Personal Bankruptcy Law Information
- Bankruptcy Law Network
- National Association of Bankruptcy Trustees (NABT)
- National Association of Consumer Bankruptcy Attorneys (NACBA)
- National Consumer Law Center (NCLC) - Bankruptcy
- United States Trustee Program - Bankruptcy