Bankruptcy Laws
Sadly, every year in the United States, over 1.2 million people and companies file for bankruptcy. Bankruptcy laws regulate the legal process of bankruptcy as determined by Title 11 of the United States Code, also referred to as the Bankruptcy Code. The law for bankruptcy is intentionally designed to alleviate the financial situation of people and companies who face insurmountable debt. The law for bankruptcy legislates the supervised procedure to liquidate or reorganize, or a combination of both, a debtor’s assets in order to pay off his debts. The law for bankruptcy also attempts to treat creditors, whose debtors have filed for bankruptcy, with a degree of equality in receiving whatever portion of the debt can fairly be met. The law for bankruptcy is controlled federally by the Supreme Court, which means that states do not have separate legislation for bankruptcy.
The law for bankruptcy is divided into different chapters in the Bankruptcy Code. Three chapters describe the law for bankruptcy as it can be applied for different situations: chapter 7, chapter 11 and chapter 13.
Chapter 7 bankruptcy laws regulate bankruptcy for individuals with no valuable assets and who do not have enough income to conduct a payment plan to pay off their debt.
Chapter 7 bankruptcy laws generally apply to debtors with unsecured debts, like credit card bills and medical bills. Another form of personal bankruptcy is regulated by the bankruptcy laws of chapter 13. These bankruptcy laws apply to debtors who have sufficient income to support a payment plan, and in addition possess a valuable asset like a home. Generally, the payment plan constructed in these cases enables debtors to keep making their mortgage payments so they do not lose their homes.
Chapter 11 bankruptcy laws – In contrast to the aforementioned forms of bankruptcy law, the bankruptcy laws of chapter 11 regulate bankruptcies dealing with extremely large debts. Most companies that file for bankruptcy do so under the bankruptcy laws of chapter 11. The bankruptcy laws of chapter 11 regulate the reorganizations of assets and allow the companies to stay in business in order to pay off their debts.