Federal bankruptcy law is a complex and constantly evolving process in order to help individuals or businesses who are facing financial distress. The purpose of federal bankruptcy law is to provide debtors with an efficient way to liquidate their assets, pay creditors, and reorganize their finances. This article will discuss the history of federal bankruptcy law, as well as the procedure for filing under Chapter 7 and Chapter 13 Bankruptcy.
The modern-day U.S. Bankruptcy Code was established in 1978 after the passage of the Bankruptcy Reform Act that year. The purpose of this act was to encourage economic recovery by providing people with a way to get out from under overwhelming debt burdens and become financially solvent again. Prior iterations of federal bankruptcy laws were found in earlier pieces of legislation such as the National Bankruptcy Act of 1898 and 1934, but these statutes had limited scope compared to today’s Bankruptcy Code which covers all aspects of insolvency proceedings including personal, corporate, agricultural debt issues among others (1).
There are two primary types of consumer bankruptcies: chapter 7 liquidation and chapter 13 repayment plans (2). In a chapter 7 case, a debtor can petition the court for protection against their creditors while they sell off non-exempt property in order to raise money for repaying debts or at least partially reduce them (3). However, some states allow certain exemptions on certain assets so that those items may not be subject to sale by court order; this varies from state-to-state so it’s important for someone considering filing a chapter 7 case check what’s available on their local laws before proceeding (4).
Discuss federal bankruptcy law and procedure.
For people whose incomes exceed certain thresholds set out in the means test then they may not qualify for relief through a chapter 7 case; instead they must file under Chapter 13 which provides more flexibility regarding how much debt can be discharged (5). Under Chapter 13 cases individuals agree with creditors on payment plans over three-to five years that enable them meet their obligations without having any assets seized by lenders or collectors due legal action taken against them (6). Furthermore when working out payment arrangements during this type bankruptcy individual filers aren’t responsible paying interest rate even if loan contracts include one; rather only principle balances need be paid back whatever portion agreed upon between creditor borrower depending upon length term plan adopted i(7)nstead . In instances where spouses have joint debts both parties typically required enter into separate repayment agreements together unless otherwise listed documents filed court prior approval being meted out settlement terms reached between parties involved go forth manner intended desired outcome achieved successfully within period time allotted .
Ultimately federal bankrupty law has been put place assist those struggling financial difficulty gain control lives maintain exit stage equitable fashion allowing fresh start following its conclusion . Generally speaking procedures remain same across nations although regulations vary greatly dependant jurisdiction matter located within guidelines existed legislation enforced Supreme Court respective area location therefore important understand aware local state policies come point consider pursuing form declaring oneself legally declare themselves borrowers thus give opportunity make good bad situation left behind after end process completed satisfactory completion finalizing all outstanding accounts debts owed creditors entities involved agreement part conducted duration entire event takes place relation thereto afterwards being said should noted person wishing seek assistance aid counsel lawyers legal advisors vested interested specialists knowledgeable field experienced pertaining greatest benefit individual companies undertaking said route .