Different Types Of Bankruptcy Case
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The present bankruptcy law, approved in 1978, is called by Bankruptcy Code. The Code was amended in 2005, however, the 2005 amendments do not apply to cases filed before or pending on the amendments’ effectual date, Oct. 17, 2005. The Code is enhanced by the Federal Rules of Bankruptcy Procedure, as well as local rules, which direct the procedures used in the bankruptcy courts.
The Code is place forth in Title 11 of the U.S. Code. It consists of nine chapters: 1, 3, 5, 7, 9, 11, 12, 13 and 15. Chapters 1, 3 and 5 are general applicability. Chapters 7, 9, 11, 12, 13 and 15 each tackle with a particular kind of bankruptcy proceeding. The Code refers to those facing financial crisis pressure or entity as the “debtor.”
Debtors file bankruptcy for several of reasons; comprising divorce, job loss and health troubles. Pursuant to several stay provisions, debtors are, upon filing, entitled to a break from collection activities. By filing for bankruptcy, debtors may entail a discharge of personal liability from various debts and may be able to reorganize others.
There are two basic kinds of bankruptcy proceedings that are liquidations and reorganizations. In liquidations, directed by chapter 7, the debtor’s non-exempt assets are sold for the assistance of creditors. In exchange for surrendering these assets, the debtor usually attains a discharge of personal liability for pre-bankruptcy debts and may enjoy assets entailed after the filing.
Chapters 11, 12 and 13 comprise several kinds of reorganizations or payment plans. In bankruptcy reorganizations, the debtor’s assets are not sold. Individual debtors, often file chapter 13 cases in order to save their homes. Reorganization bankruptcies let a debtor the chance to reorganize the debt and to pay it, either partially or in full, by a plan funded by his income. The plan must be assured by the court for it to be mandated upon creditors.
Tags: bankruptcy courts, Federal Rules of Bankruptcy Procedure, present bankruptcy law
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