Bankruptcy Laws | Bankruptcy Law for Chapter 7, 11 & 13
Bankruptcy law is a supervised legal process that is regulated federally in Title 11 of the United States Code. The purpose of Bankruptcy laws, including chapter 7 bankruptcy laws, chapter 11 bankruptcy laws and chapter 13 bankruptcy laws, are to help people who can no longer pay their creditors get debt relief by either liquidating their assets to pay their debts, or by forming a repayment plan. Bankruptcy laws also protect businesses that are in financial trouble and allow for a reorganization or liquidation in order to pay off business creditors. Chapter 11 bankruptcy laws apply mainly to this situation. Furthermore, bankruptcy law establishes the priority of the creditors’ interest while attempting to treat them with a certain amount of equality. Because bankruptcy law is regulated federally, the individual states do not have separate legislation for bankruptcy laws.
Chapter 7 Bankruptcy Laws And Chapter 13 Bankruptcy Laws
As controlled by chapter 7 bankruptcy laws and chapter 13 bankruptcy laws, a bankruptcy proceeding can be entered into voluntarily by a debtor or initiated by creditors. Chapter 7 bankruptcy laws, which describe the liquidation process, limit the types of debt eligible, and notes the requirements for a debtor to be discharged of the remainder of his debt even if they haven’t been paid in full. Chapter 13 bankruptcy laws govern the reorganizing and supervision of a debtor’s assets in order to pay off his debts. Chapter 13 bankruptcy laws also state the conditions under which a debtor is allowed to stay in business in order to use the revenue he generates to pay off his creditors. Chapter 11 bankruptcy laws are similar to chapter 13 laws, with the difference that chapter 11 bankruptcy laws do not limit the amount of debt and as such apply mainly to corporations with large debts. After a bankruptcy proceeding has been filed, chapter 7 bankruptcy laws and chapter 13 bankruptcy laws state that creditors may only seek to collect their debts within the proceeding. Chapter 7 bankruptcy and chapter 13 bankruptcy laws also prohibit the debtor from transferring property that has been declared part of his estate and as such, subject to proceedings.
In 2005, the Supreme Court amended the chapter 7, chapter 11 and chapter 13 bankruptcy laws. An important consequence of this amendment to bankruptcy law was the protection of IRA’s, which means that millions of baby-boomers approaching retirement gained increased protection of their life’s earnings.
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