Bankruptcy Law
Bankruptcy Law
Bankruptcy law in the US has two goals: to protect a debtor by giving them a fresh start free from creditor’s claims, and to ensure equitable treatment to creditors who are competing for debtor’s assets.
Bankruptcy Proceedings * The role of Bankruptcy Courts * Bankruptcy proceedings are held in federal bankruptcy courts. * These courts fulfill the role of an administrative court for the federal district court concerning matters in bankruptcy. * These matters concern the administering the estate of the debtor in bankruptcy (the estate consists of the debtor’s assets). * Types of Bankruptcy Relief * Chapter 7 provides for liquidation proceedings – the selling of all nonexempt assets and the distribution of the proceeds to the debtor’s creditors. * Chapter 11 governs reorganizations. * Chapters 12 and 13 provides for the adjustment of debts by parties with regular incomes such as family farmers and family fisherman under Chapter 12 and individuals under Chapter 13.
Liquidation Proceedings
Liquidation under Chapter 7 of the Bankruptcy Code is generally the most familiar type of bankruptcy proceeding and is often referred to as an ordinary or straight bankruptcy.
A debtor in a liquidation bankruptcy turns all assets over to a trustee; the trustee sells the nonexempt assets and distributes the proceeds to creditors.
With certain exceptions, the remaining debts are then discharged (extinguished), and the debtor is relieved of the obligation to pay. * Intro * A “person” may be a debtor in a liquidation proceeding, with a “person” defined as individuals, partnerships, and corporations. * Railroads, insurance companies, banks, etc may not be debtors. * A straight bankruptcy may be commenced by the filing of either a voluntary or an involuntary petition in bankruptcy – the document that is filed with a bankruptcy court to initiate bankruptcy proceedings. *
Bankruptcy law in the US has two goals: to protect a debtor by giving them a fresh start free from creditor’s claims, and to ensure equitable treatment to creditors who are competing for debtor’s assets.
Bankruptcy Proceedings * The role of Bankruptcy Courts * Bankruptcy proceedings are held in federal bankruptcy courts. * These courts fulfill the role of an administrative court for the federal district court concerning matters in bankruptcy. * These matters concern the administering the estate of the debtor in bankruptcy (the estate consists of the debtor’s assets). * Types of Bankruptcy Relief * Chapter 7 provides for liquidation proceedings – the selling of all nonexempt assets and the distribution of the proceeds to the debtor’s creditors. * Chapter 11 governs reorganizations. * Chapters 12 and 13 provides for the adjustment of debts by parties with regular incomes such as family farmers and family fisherman under Chapter 12 and individuals under Chapter 13.
Liquidation Proceedings
Liquidation under Chapter 7 of the Bankruptcy Code is generally the most familiar type of bankruptcy proceeding and is often referred to as an ordinary or straight bankruptcy.
A debtor in a liquidation bankruptcy turns all assets over to a trustee; the trustee sells the nonexempt assets and distributes the proceeds to creditors.
With certain exceptions, the remaining debts are then discharged (extinguished), and the debtor is relieved of the obligation to pay. * Intro * A “person” may be a debtor in a liquidation proceeding, with a “person” defined as individuals, partnerships, and corporations. * Railroads, insurance companies, banks, etc may not be debtors. * A straight bankruptcy may be commenced by the filing of either a voluntary or an involuntary petition in bankruptcy – the document that is filed with a bankruptcy court to initiate bankruptcy proceedings. *