Bankruptcy Law -- Bankruptcy Legislation -- Bankruptcy Law Attorney

Bankruptcy Laws Help People Get Out of Debt

According to the law, a plan is to be developed that allows a person, who is not in a position to pay off his debts, to repay his creditors by dividing his assets among them. This administered division of assets ensures that the interests of all the creditors are treated with some measure of equality. 

Some bankruptcy proceedings allow people who are unable to pay off their debts to stay in business and to use the income to pay their debts. Bankruptcy law also allows some debtors to free themselves of their debts, after their assets have been divided, even if they have not been able to clear their debts entirely. 

The Bankruptcy Code was passed by Congress under its constitutional grant of authority, in order to create uniform laws on the subject of bankruptcy throughout the United States. The law is federal statutory law, which is contained in Title 11 of the United States Code. 

States are not allowed to regulate bankruptcy, though they can pass bankruptcy legislation that governs other aspects of the relationship between the debtor and the creditor. Several sections of Title 11 of the United States Code include the law relating to debtors and creditors of the individual states.

Bankruptcy proceedings are conducted under the supervision of the United States Bankruptcy Courts, which are a part of the district courts of the US. The proceedings in the bankruptcy courts are governed by the Bankruptcy Rules, which were promulgated by the Supreme Court under the authority of Congress.

The Congress established the United States Trustees to manage many of the duties of bankruptcy proceedings. 

Basically there are two types of bankruptcy proceedings. Bankruptcy filed under Chapter 7, which is the most common form of bankruptcy proceeding, is termed as liquidation. It involves the appointment of a trustee who sells the non-exempt property of the debtor, and divides the money among the creditors. 

Bankruptcy proceedings that are filed under Chapters 11, 12, and 13 involve helping debtors to get out of debt by allowing them to use their future earnings repay their creditors. A trustee is appointed to supervise the assets of the debtor, under Chapter 7, 12, 13, and some Chapter 11 proceedings.

Bankruptcy proceedings can either be initiated by debtors of their own accord, or by creditors. After bankruptcy proceedings have been initiated, creditors normally cannot try to collect their debts outside the legal process.

The person, who is in debt, may not transfer any assets that have been declared as part of the estate that is subject to the proceedings. Apart from this, some transfers of assets, secured interests, and liens made before the proceedings may be delayed or declared invalid. The provisions of the bankruptcy code can be used to establish the priority of interests of the creditors. 

New bankruptcy laws are providing more protection to debtors. A new bankruptcy law, called the Bankruptcy Prevention and Consumer Protection Act, passed in April 2005, has also resulted in major reforms. 

For more information about the law, you can seek the advice of a reputed bankruptcy law attorney. Or, you can rely upon information found here and decide to allow the bankruptcy trustee to guide you with the process.