Bankruptcy Proceedings

Bankruptcy law is a federal statutory law and Bankruptcy proceedings are undertaken in the United States Bankruptcy Courts which are a part of the District Court system.

The US Bankruptcy Code has multiple chapters and each chapter describes a different procedure for debt resolution. Liquidation under Chapter 7 is the most common form of bankruptcy which involves the appointment of a trustee who collects the non-exempt property of the debtor, sells it and distributes the proceeds to the creditors.

A debtor can voluntarily enter into Bankruptcy and it can also be commenced involuntarily even by one creditor if the debt owed is sufficiently large. If an involuntary bankruptcy is not dealt with properly, it may subject the creditor to large damages.

One of the purposes of bankruptcy is to ensure orderly and reasonable management of debt. Thus, exemptions are sought to prevent seizure of personal items of meager or no economic value, such as diary, toothbrush, ordinary clothing, etc. Similarly, some tools of the trade may also be a permissible exemption as their continued possession allows the debtor to restart productive work as soon as possible.

Bankruptcy Information

Every debt is not discharged under every chapter of the Code. Certain taxes owed to Federal, state or local government, government guaranteed student loans, and certain other obligations cannot be discharged.