Bankruptcy in the United States Bankruptcy is largely governed
by federal law commonly referred to as the bankruptcy code code.
The United States Constitution Article 1 Section, 8 Clause 4
authorizes congress to enact uniform laws on the subject of
bankruptcies throughout the United States Congress.
As exercise this Authority several times since 1801,
including through adoption of the bankruptcy Reform Act of
1978 as amended codified in title 11 of the United States
code and the bankruptcy Abuse Prevention and consumer
protection act of 2005. Some laws relevant to bankruptcy
are found in other parts of the United States code.
For example, bankruptcy crimes are found in Title 18 of the
United States code, crimes tax implications of bankruptcy are
found in title 26 of the United States code, Internal Revenue
code and the creation and jurisdiction of bankruptcy
courts are found in title 28 of the United States code
judiciary. Judicial procedure bankruptcy
cases are filed in the United States.
Bankruptcy Court units of the United States district courts
and federal law governs procedure in bankruptcy cases.
However, state laws are often applied to determine how
bankruptcy affects the property rights of debtors.
For example, laws, governing the validity of liens or rules
protecting certain property from creditors known as exemptions
May derive from state law or federal law.
Because state law plays a major role in any bankruptcy, Cases it
is often unwise to generalize some bankruptcy issues across
state lines history originally bankruptcy in the United States.
As nearly all matters, directly concerning individual citizens
was a subject of state law. However, the rear several
short-lived federal bankruptcy laws before the act of 1898, the
bankruptcy Act of 1801, it was repealed in 1803.
The act of 1841 which was repealed in 1843 and the act of
In 67, which was amended in 1874 and repealed in 1878, the first
more lasting federal bankruptcy law sometimes called the Nelson
act, initially entered into force in 1898.
The current bankruptcy code was enacted in 1978 by section, 101
of the bankruptcy Reform Act of 1978 and generally became
effective on October 1st, 1979, it completely replaced.
The former bankruptcy law, the Chandler Act of 1938 Eight,
which had given unprecedented power to the Securities and
Exchange Commission for the regulation of bankruptcy
filings. The current code has been
amended numerous times since 1978 see also, the bankruptcy
Abuse Prevention and consumer protection.
Act of 2005. Chapters of the bankruptcy code
entities seeking relief under the bankruptcy code May file a
petition for Relief under a number of different chapters of
the code, depending on circumstances Title 11 contains
nine chapters. Both of which provide for the
filing of a petition, the other three chapters provide rules.
Governing bankruptcy cases in general, a case is typically
referred to by the chapter under which the petition is filed.
These chapters are described below chapter 7, liquidation
liquidation. Under a chapter 7 filing is the
most common form of bankruptcy liquidation.
Involves the appointment of a trustee who collects the
non-exempt property of the debtor, sells it to distributes
the proceeds to the creditors. Because, all states allow for
debtors to keep essential property.
Chapter 7 cases are often no asset case has meaning that the
bankrupt estate has no non-exempt assets to fund a
distribution to creditors Chapter 7, bankruptcy remains on
a bankruptcy. Filers credit report.
For 10 years. United States Bankruptcy Law
significantly changed in 2005 with a passage of bankruptcy,
Abuse Prevention and consumer protection.
Act u.s. Dash Kappa which made it more
difficult for Consumer. Debtors to file bankruptcy Crup.
See in general and chapter 7 in particular, Advocates of back
pay claim that its Passage would reduce losses to creditors such
as credit card companies. And that those creditors would
then pass on the savings to other borrowers in the form of
lower interest rates critics, assert, that these claims turned
out to be false observing that although credit card company
losses. Decreased after passage of the
ACT prices charged to customers increased and credit card
company profits, increased chapter 9 reorganization for
municipalities A chapter 9 bankruptcy is available only to
municipalities chapter 9 is a form of reorganization, not
liquidation notable, examples of Municipal, bankruptcies include
that of Orange County, California 1994 to 1996.
And the bankruptcy of the city of Detroit, Michigan and twenty
thirteen chapters, 11, 12 and 13, reorganization bankruptcy
under chapter 11, chapter 12 or chapter 13 is a more complex.
Ization and involves, allowing the debtor to keep some or all
of his or her property and use future earnings to pay off
creditors consumers. Usually file Chapter 7 or
chapter 13. Chapter 11 filings by
individuals are allowed but are rare chapter 12 is similar to
chapter 13 but is available only to family farmers and family.
Fisherman in certain situations, chapter 12 generally has more
generous terms for debtors than a comparable chapter 13 case
would have available as recently as For chapter 12 was scheduled
to expire but in late 2004, it was renewed and made permanent
chapter 15. Cross-border insolvency the
bankruptcy, Abuse Prevention, and consumer protection.
Act of 2005 added chapter 15, as a replacement for section 304
and deals with cross-border. Insolvency foreign companies
with us debts features of u.s. bankruptcy law, voluntary versus
involuntary bankruptcy as a threshold matter.
Bankruptcy case, Aces are either voluntary or involuntary
involuntary, bankruptcy cases, which account for the
overwhelming majority of cases, debtors petition, the bankruptcy
court with involuntary bankruptcy creditors rather than
the debtor file, the petition in bankruptcy, involuntary
petitions are rare, however, and are occasionally used in
business settings to force a company into bankruptcy, so that
creditors can enforce their rights.
The estate except in chapter nine cases commencement of a
bankruptcy case. Creates an estate.
Generally the debtors creditors must look to the assets of the
estate for satisfaction of their claims.
The estate consists of all property interest of the debtor,
at the time, of case, commencement subject to certain
exclusions and exemptions in the case of a married person in a
community property State, the estate may include certain
community property interest of the debtor spouse.
Even if the spouse has not filed bankruptcy, the estate may also
include other items including but not limited to property
acquired by Willow. Our inheritance within 180 days
after case, commencement for federal income tax purposes.
The bankruptcy estate of an individual in a chapter 7 or 11.
Cases a separate taxable entity from the debtor.
The bankruptcy estate of a corporation partnership or other
Collective entity or the estate of an individual in chapters 12
or 13 is not a separate taxable entity from the debtor
bankruptcy court in 1982, in the case of Northern pipeline
company, V Marathon pipeline, Company the United States
Supreme Court held that certain provisions of the law relating
to article, I bankruptcy judges, who are not life.
Tenured article, 3 judges are unconstitutional Congress
responded in 1984 with changes to remedy the Constitutional
defects under the revised law. Bankruptcy judges, in each
Judicial District constitute, a unit of the applicable.
United States District Court. Each judge is appointed for a
term of 14 years by the United States, court of appeals for the
circuit, in which Which the applicable district is located.
The United States district courts have subject matter
jurisdiction over bankruptcy matters.
However, each such District Court, may buy order, refer
bankruptcy matters to the bankruptcy court and most
district courts have a standing reference order to that effect.
So that of all bankruptcy cases are handled by the bankruptcy
court in unusual circumstances, a district court.
May withdraw the reference for example, taking a particular
case or proceeding within the case away from the Court and
decide the matter itself, decisions of the bankruptcy
court are generally appealable to the district court and then
to the court of appeals. However, in a few jurisdictions,
a separate court called a bankruptcy, appellate panel,
composed of bankruptcy judges here, certain appeals from
bankruptcy courts, United States trustee the United States,
Attorney General points, a separate United States trustee
for each of 21, geographical regions for a five-year term.
Each trustee is removable from by and works under the general
supervision of the Attorney, General.
The US trustees, maintain Regional Offices that correspond
with Federal Judicial districts, and our administrative Lee
overseen by the executive office for United States, trustees, in
Washington, d.c. each United States trustee, and officer of
the US Department of Justice is responsible for maintaining and
supervising a panel of private Trustees for Chapter 7
bankruptcy cases, the trustee has other duties, including the
administration of most bankruptcy cases.
Trustees under Section 307 of Title, 11 of the u.s. code.
A u.s. trustee May raise and may appear in be heard on any issue.
In any case or proceeding in bankruptcy except for filing, a
plan of reorganization in a chapter, 11 case the automatic
stay bankruptcy code section, 362 imposes.
The automatic stay at the moment of bankruptcy petition is filed
the automatic State, generally prohibits the commencement
enforcement, or repeal of actions, and judgments, Social
or administrative against a debtor, for the collection of a
claim that arose prior to the filing of the bankruptcy
petition, the automatic stay also prohibits collection
actions and proceedings directed toward property of the
bankruptcy. Estate itself in some courts
violations of the stay are treated as void.
AB initio is a matter of law although the court May in all
the state of give effect to otherwise void acts other Court
Street violations as voidable not necessarily void.
AB, initio any violation of the state Give rise to damages being
assessed against the violating party.
Non willful violations of this day are often excused without
penalty, but willful violators are liable.
For punitive damages and may also be found to be in contempt
of court. A secured, creditor may be
allowed to take the applicable collateral, if the Creditor
first obtains permission from the court permission is
requested by a creditor by filing a motion for relief from
the automatic stay. The court must either Grant the
motion or provide adequate protection to the secured.
Creditor that the value of their collateral will not decrease
during the stay without the bankruptcy protection of the
automatic stay creditors, might raise to the courthouse to
improve their positions against a debtor.
If the debtors business were facing a temporary crunch but
were nevertheless viable in the long term, it might not survive
a run by creditors. A run could also result in waste
and unfairness among similarly situated creditors.
Bankruptcy code, 362. D, gives four ways that a
creditor can get the automatic stay room.
I moved.