What is Bankruptcy - What Types of Bankruptcy is right for you?

What is Bankruptcy?

Bankruptcy is a proceeding in which a court administers the estate (the property and other assets) of a debtor for the benefit of creditors.

A debtor (a person or business who owes money to others) may choose to file a bankruptcy proceeding to resolve a hopeless financial situation, or to stave off the collection of debts for a period of timeto allow for financial reorganization.

Individuals or businesses may file for bankruptcy. In some cases, a creditor (a person or business that is owed money) may force the filing of a bankruptcy proceeding, although these "involuntary" proceedings are very rare. See also Debtor and Creditor for a discussion of the rights and remedies of debtors and creditors outside of bankruptcy proceedings.


Bankruptcy Law
What Law Applies to Bankruptcy?

The United States Constitution authorizes Congress to adopt "uniform laws" on bankruptcy. The federal bankruptcy law has two goals:

* To obtain fair treatment for creditors and
* To obtain a fresh start for both consumer and business debtors involved in bankruptcy proceedings.

Federal bankruptcy law governs bankruptcy proceedings, except, when Congress has chosen to defer to state law.

The Federal Bankruptcy Code (law) was revised extensively in 1978, with some changes adopted in 1984, 1986, and 1994. The 1994 legislation included a provision appointing the National Bankruptcy Review Commission to study the Bankruptcy Code. The Commission rendered a report in late 1997 containing extensive recommendations for changes in the Bankruptcy Code. Changes in federal bankruptcy law are likely to occur as a result of this report, although the nature and timing of the changes remains to be seen.

What are the Kinds of Bankruptcy?

Federal bankruptcy law contains several different groups of provisions called "Chapters," governing specific types of bankruptcy proceedings.

* Chapter 7 (Straight Bankruptcy) proceedings involve the complete liquidation of the debtor’s estate.
* Chapter 9 - Municipal governments may also file for bankruptcy under Chapter 9.
* Chapter 11 (Business Bankruptcy) proceedings technically are also available to consumer debtors, although unlikely to be more advantageous than either a Chapter 7 or Chapter 13 proceeding.

* Chapter 12 (Family Farm Bankruptcy)governs family farm bankruptcies. See Agricultural Law: Family Farm Bankruptcy for a discussion of family farm bankruptcies.
* Chapter 13 (Wage Earner Bankruptcy) permits the payment of debts pursuant to a repayment plan.

A consumer, or non-business debtor, can file for bankruptcy under either Chapter 7 or Chapter 13. See Consumer Bankruptcy.

Businesses may file for straight bankruptcy under Chapter 7 or under Chapter 11, which is designed for business bankruptcy reorganizations. See Business Bankruptcy.

The Bankruptcy Code contains a special provision (Section 304) for bankruptcy proceedings involving the U.S. assets of foreign companies.

Article Source: http://casinoarticles.us

Brad specializes in Bankruptcy and has been a Bankruptcy Lawyer for ten years.

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