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Bankruptcy in the United States 
Bankruptcy is largely governed 

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by federal law commonly referred
to as the bankruptcy code code. 

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The United States Constitution 
Article 1 Section, 8 Clause 4 

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authorizes congress to enact 
uniform laws on the subject of 

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bankruptcies throughout the 
United States Congress. 

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As exercise this Authority 
several times since 1801, 

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including through adoption of 
the bankruptcy Reform Act of 

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1978 as amended codified in 
title 11 of the United States 

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code and the bankruptcy Abuse 
Prevention and consumer 

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protection act of 2005. 
Some laws relevant to bankruptcy

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are found in other parts of the 
United States code. 

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For example, bankruptcy crimes 
are found in Title 18 of the 

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United States code, crimes tax 
implications of bankruptcy are 

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found in title 26 of the United 
States code, Internal Revenue 

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code and the creation and 
jurisdiction of bankruptcy 

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courts are found in title 28 of 
the United States code 

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judiciary. 
Judicial procedure bankruptcy 

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cases are filed in the United 
States. 

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Bankruptcy Court units of the 
United States district courts 

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and federal law governs 
procedure in bankruptcy cases. 

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However, state laws are often 
applied to determine how 

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bankruptcy affects the property 
rights of debtors. 

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For example, laws, governing the
validity of liens or rules 

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protecting certain property from
creditors known as exemptions 

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May derive from state law or 
federal law. 

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Because state law plays a major 
role in any bankruptcy, Cases it

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is often unwise to generalize 
some bankruptcy issues across 

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state lines history originally 
bankruptcy in the United States.

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As nearly all matters, directly 
concerning individual citizens 

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was a subject of state law. 
However, the rear several 

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short-lived federal bankruptcy 
laws before the act of 1898, the

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bankruptcy Act of 1801, it was 
repealed in 1803. 

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The act of 1841 which was 
repealed in 1843 and the act of 

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In 67, which was amended in 1874
and repealed in 1878, the first 

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more lasting federal bankruptcy 
law sometimes called the Nelson 

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act, initially entered into 
force in 1898. 

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The current bankruptcy code was 
enacted in 1978 by section, 101 

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of the bankruptcy Reform Act of 
1978 and generally became 

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effective on October 1st, 1979, 
it completely replaced. 

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The former bankruptcy law, the 
Chandler Act of 1938 Eight, 

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which had given unprecedented 
power to the Securities and 

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Exchange Commission for the 
regulation of bankruptcy 

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filings. 
The current code has been 

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amended numerous times since 
1978 see also, the bankruptcy 

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Abuse Prevention and consumer 
protection. 

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Act of 2005. 
Chapters of the bankruptcy code 

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entities seeking relief under 
the bankruptcy code May file a 

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petition for Relief under a 
number of different chapters of 

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the code, depending on 
circumstances Title 11 contains 

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nine chapters. 
Both of which provide for the 

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filing of a petition, the other 
three chapters provide rules. 

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Governing bankruptcy cases in 
general, a case is typically 

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referred to by the chapter under
which the petition is filed. 

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These chapters are described 
below chapter 7, liquidation 

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liquidation. 
Under a chapter 7 filing is the 

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most common form of bankruptcy 
liquidation. 

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Involves the appointment of a 
trustee who collects the 

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non-exempt property of the 
debtor, sells it to distributes 

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the proceeds to the creditors. 
Because, all states allow for 

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debtors to keep essential 
property. 

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Chapter 7 cases are often no 
asset case has meaning that the 

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bankrupt estate has no 
non-exempt assets to fund a 

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distribution to creditors 
Chapter 7, bankruptcy remains on

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a bankruptcy. 
Filers credit report. 

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For 10 years. 
United States Bankruptcy Law 

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significantly changed in 2005 
with a passage of bankruptcy, 

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Abuse Prevention and consumer 
protection. 

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Act u.s. 
Dash Kappa which made it more 

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difficult for Consumer. 
Debtors to file bankruptcy Crup.

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See in general and chapter 7 in 
particular, Advocates of back 

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pay claim that its Passage would
reduce losses to creditors such 

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as credit card companies. 
And that those creditors would 

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then pass on the savings to 
other borrowers in the form of 

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lower interest rates critics, 
assert, that these claims turned

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out to be false observing that 
although credit card company 

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losses. 
Decreased after passage of the 

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ACT prices charged to customers 
increased and credit card 

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company profits, increased 
chapter 9 reorganization for 

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municipalities A chapter 9 
bankruptcy is available only to 

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municipalities chapter 9 is a 
form of reorganization, not 

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liquidation notable, examples of
Municipal, bankruptcies include 

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that of Orange County, 
California 1994 to 1996. 

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And the bankruptcy of the city 
of Detroit, Michigan and twenty 

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thirteen chapters, 11, 12 and 
13, reorganization bankruptcy 

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under chapter 11, chapter 12 or 
chapter 13 is a more complex. 

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Ization and involves, allowing 
the debtor to keep some or all 

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of his or her property and use 
future earnings to pay off 

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creditors consumers. 
Usually file Chapter 7 or 

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chapter 13. 
Chapter 11 filings by 

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individuals are allowed but are 
rare chapter 12 is similar to 

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chapter 13 but is available only
to family farmers and family. 

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Fisherman in certain situations,
chapter 12 generally has more 

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generous terms for debtors than 
a comparable chapter 13 case 

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would have available as recently
as For chapter 12 was scheduled 

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to expire but in late 2004, it 
was renewed and made permanent 

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chapter 15. 
Cross-border insolvency the 

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bankruptcy, Abuse Prevention, 
and consumer protection. 

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Act of 2005 added chapter 15, as
a replacement for section 304 

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and deals with cross-border. 
Insolvency foreign companies 

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with us debts features of u.s. 
bankruptcy law, voluntary versus

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involuntary bankruptcy as a 
threshold matter. 

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Bankruptcy case, Aces are either
voluntary or involuntary 

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involuntary, bankruptcy cases, 
which account for the 

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overwhelming majority of cases, 
debtors petition, the bankruptcy

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court with involuntary 
bankruptcy creditors rather than

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the debtor file, the petition in
bankruptcy, involuntary 

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petitions are rare, however, and
are occasionally used in 

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business settings to force a 
company into bankruptcy, so that

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creditors can enforce their 
rights. 

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The estate except in chapter 
nine cases commencement of a 

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bankruptcy case. 
Creates an estate. 

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Generally the debtors creditors 
must look to the assets of the 

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estate for satisfaction of their
claims. 

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The estate consists of all 
property interest of the debtor,

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at the time, of case, 
commencement subject to certain 

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exclusions and exemptions in the
case of a married person in a 

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community property State, the 
estate may include certain 

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community property interest of 
the debtor spouse. 

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Even if the spouse has not filed
bankruptcy, the estate may also 

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include other items including 
but not limited to property 

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acquired by Willow. 
Our inheritance within 180 days 

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after case, commencement for 
federal income tax purposes. 

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The bankruptcy estate of an 
individual in a chapter 7 or 11.

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Cases a separate taxable entity 
from the debtor. 

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The bankruptcy estate of a 
corporation partnership or other

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Collective entity or the estate 
of an individual in chapters 12 

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or 13 is not a separate taxable 
entity from the debtor 

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bankruptcy court in 1982, in the
case of Northern pipeline 

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company, V Marathon pipeline, 
Company the United States 

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Supreme Court held that certain 
provisions of the law relating 

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to article, I bankruptcy judges,
who are not life. 

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Tenured article, 3 judges are 
unconstitutional Congress 

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responded in 1984 with changes 
to remedy the Constitutional 

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defects under the revised law. 
Bankruptcy judges, in each 

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Judicial District constitute, a 
unit of the applicable. 

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United States District Court. 
Each judge is appointed for a 

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term of 14 years by the United 
States, court of appeals for the

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circuit, in which Which the 
applicable district is located. 

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The United States district 
courts have subject matter 

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jurisdiction over bankruptcy 
matters. 

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However, each such District 
Court, may buy order, refer 

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bankruptcy matters to the 
bankruptcy court and most 

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district courts have a standing 
reference order to that effect. 

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So that of all bankruptcy cases 
are handled by the bankruptcy 

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court in unusual circumstances, 
a district court. 

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May withdraw the reference for 
example, taking a particular 

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case or proceeding within the 
case away from the Court and 

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decide the matter itself, 
decisions of the bankruptcy 

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court are generally appealable 
to the district court and then 

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to the court of appeals. 
However, in a few jurisdictions,

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a separate court called a 
bankruptcy, appellate panel, 

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composed of bankruptcy judges 
here, certain appeals from 

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bankruptcy courts, United States
trustee the United States, 

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Attorney General points, a 
separate United States trustee 

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for each of 21, geographical 
regions for a five-year term. 

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Each trustee is removable from 
by and works under the general 

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supervision of the Attorney, 
General. 

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The US trustees, maintain 
Regional Offices that correspond

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with Federal Judicial districts,
and our administrative Lee 

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overseen by the executive office
for United States, trustees, in 

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Washington, d.c. each United 
States trustee, and officer of 

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the US Department of Justice is 
responsible for maintaining and 

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supervising a panel of private 
Trustees for Chapter 7 

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bankruptcy cases, the trustee 
has other duties, including the 

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administration of most 
bankruptcy cases. 

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Trustees under Section 307 of 
Title, 11 of the u.s. code. 

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A u.s. trustee May raise and may
appear in be heard on any issue.

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In any case or proceeding in 
bankruptcy except for filing, a 

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plan of reorganization in a 
chapter, 11 case the automatic 

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stay bankruptcy code section, 
362 imposes. 

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The automatic stay at the moment
of bankruptcy petition is filed 

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the automatic State, generally 
prohibits the commencement 

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enforcement, or repeal of 
actions, and judgments, Social 

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or administrative against a 
debtor, for the collection of a 

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claim that arose prior to the 
filing of the bankruptcy 

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petition, the automatic stay 
also prohibits collection 

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actions and proceedings directed
toward property of the 

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bankruptcy. 
Estate itself in some courts 

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violations of the stay are 
treated as void. 

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AB initio is a matter of law 
although the court May in all 

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the state of give effect to 
otherwise void acts other Court 

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Street violations as voidable 
not necessarily void. 

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AB, initio any violation of the 
state Give rise to damages being

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assessed against the violating 
party. 

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Non willful violations of this 
day are often excused without 

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penalty, but willful violators 
are liable. 

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For punitive damages and may 
also be found to be in contempt 

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of court. 
A secured, creditor may be 

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allowed to take the applicable 
collateral, if the Creditor 

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first obtains permission from 
the court permission is 

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requested by a creditor by 
filing a motion for relief from 

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the automatic stay. 
The court must either Grant the 

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motion or provide adequate 
protection to the secured. 

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Creditor that the value of their
collateral will not decrease 

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during the stay without the 
bankruptcy protection of the 

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automatic stay creditors, might 
raise to the courthouse to 

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improve their positions against 
a debtor. 

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If the debtors business were 
facing a temporary crunch but 

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were nevertheless viable in the 
long term, it might not survive 

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a run by creditors. 
A run could also result in waste

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and unfairness among similarly 
situated creditors. 

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Bankruptcy code, 362. 
D, gives four ways that a 

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creditor can get the automatic 
stay room. 

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I moved.