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Home >> Bankruptcy Law - An Outline
Bankruptcy Law - An Outline
By: Joseph Then
Bankruptcy law is the governing laws that say what happens in the bankruptcy process, who can file what type of bankruptcy and every other detail involved in filing bankruptcy. It is important that you are serious when filing bankruptcy and that you make sure your completely understand the process.
An Establishment of Bankruptcy Law
The United Bankruptcy Code is the law that regulates and establishes bankruptcy. This is a federal law and bankruptcy is held in federal bankruptcy courts. Federal bankruptcy judges hear bankruptcy cases.
States get involved on some level with the process. Each state has one or more bankruptcy courts to hear resident cases. Additionally, exemptions are established under federal law, but states also have exemptions that can be chosen instead of the federal exemptions.
Variations of Bankruptcy Law
There are many variances in the bankruptcy laws that can be confusing. Here are some top things you should know about:
Exemptions - Exemptions are assets that are protected. You will have a federal list and a state list. You have to choose one or the other. The idea is to go with the one that protects the most of your assets.
Different types of bankruptcy - There are many different types of bankruptcy. Individuals usually either file Chapter 7 or Chapter 13. In any case it is important to understand the difference. You also have to make sure that you qualify for the chosen type under the new laws.
Alternatives - Nobody really wants a bankruptcy filed. It will ruin your credit and possible cause you to lose assets. Creditors lose money and the government racks up costs during the process, too. In the end everyone benefits more from an alternative to bankruptcy. Many times during the process alternatives are explored to see if they would make more sense then filing bankruptcy.
The New Bankruptcy Laws
New laws were designed to help reduce the number of bankruptcies being filed and to help prevent abuse of the system. These new laws made several changes.
One of the best known changes is the new requirement of credit counseling. This is done two times during the process. The first time is to help a person make sure they should file bankruptcy and that an alternative is not a better solution. The second session helps the person to be a better consumer and learn about being responsible with credit.
Another major change is the limitation on who can file Chapter 7. This limitation makes a Chapter 7 based on income. Those making too much have to file a Chapter 13.
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