The Basic List Of Bankruptcy Procedures

If there is no way to avoid bankruptcy and you have finally decided to go for it, you must be well aware of the basic list of bankruptcy procedures that you need to follow. If you are going through extreme financial hardship and are neck deep in debt, bankruptcy can provide you an opportunity to give a fresh start to your financial life. However, it is very important for you to keep in mind that the US laws regarding these types of cases are very complex. You should not expect me to provide you all the details in just a few short paragraphs. Even if someone describes it in lay terms, things can be quite trickier to understand. That is the reason why it is always advisable to hire an attorney to represent you in the court. Though the lawyer will perform all the legal formalities on your behalf, it is still advisable for you to have at least a basic understanding what is the process of bankruptcy and what procedures are available out there. Following is a brief overview on it.

Governing Body

The main governing body is commonly termed as “Federal Rules of Bankruptcy procedure”. You can find the copy of those rules free of cost on the official website of the US bankruptcy court. But, the list of bankruptcy procedures described in those copies are very detailed and quite complicated. Still, you must be aware of those sets of regulations the legal requirements of bankruptcy come from.

Bankruptcy Court

It is very important for you to keep in mind that you can file your petition for bankruptcy in your local law enforcement court. In the United States of America, the federal government has established specific bankruptcy courts to handle such cases. These special courts work as separate entities from other regular courts. The judicial officers, judges, and clerks working in these courts are specialized in handling bankruptcy cases only. There are ninety districts in the US, where every state has at least one district (some have more than one), and there is a bankruptcy court for every district. But all these courts follow the same list of bankruptcy procedures as defined under the federal laws.

State Vs Federal Laws

Though the federal bankruptcy laws are applicable in every state of the US, there are specific state laws as well. Some states even offer an option for the residents to either use the federal laws or the state laws. For example, every state has its own property exemption list, which differs from the federal set of exemptions. In the majority of states, you get an option to choose either federal based or the state based exemptions, but there are also many states, where it becomes mandatory for the bankrupt individual to use only the state-specified exemptions. However, despite all this, the basic list of bankruptcy procedures is used as per the federal laws only; the states do not interfere with the basic procedures.

Types Of Bankruptcy

The different types of bankruptcy have been defined under different chapters in the US bankruptcy code. However, there are only two types of bankruptcy that are the most common ones – chapter 7 bankruptcy and chapter 13 bankruptcy. In chapter 7, the court orders to discharge all your debts (except a few ones, such as IRS taxes and student loans) and also orders to liquidate all your assets and properties (except the ones that are protected under bankruptcy exemptions). Your creditors get their payments from the money thus received from the proceeds of the sales of your assets and properties. This way, you end up having just very few of your assets and properties, usually the ones that are considered as the basic necessities of your life, but you also get rid of most of your debts. In chapter 13, on the other hand, there is no risk of losing your assets and properties. The court allows you to continue with your business and orders you to continue making the repayment toward your debts as per a new more affordable repayment plan with more favorable loan term.

Court Appearance

Most of the things in the list of bankruptcy procedures are basically just paperwork, which is a very complicated task. In general, you do not need to appear in person during the court proceedings as long as you have a specialized, duly licensed bankruptcy lawyer to represent your case in the courtroom. However, there can be specific situations when you may have to appear in person in the court. Make sure you provide sincere co-operation to your lawyer all the time because they are the ones who are going to present your views or facts in the court room on your behalf. You must choose a lawyer who is reputable, experienced, charges a reasonable fee, and is someone you are comfortable working with.

Overall, when you have the knowledge of the basic list of bankruptcy procedures, it will help you get mentally prepared in advance.

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One Response to “The Basic List Of Bankruptcy Procedures”

  1. Bill says:

    Bankruptcy may be your last attempt to get rid off your multiple debts but it is very important to do a thorough study of the complicated procedure of bankruptcy. There are so many laws involved with the whole process of bankruptcy so it is always god to hire a professional attorney who can deal with all the legal formalities. At the same time, it is also necessary for you to be aware of all the happenings and the procedures of bankruptcy, only then you can get the benefits of exemptions provided for you. A copy of rules and regulations can be obtained from the website of the US Bankruptcy court; you can do a thorough study of all the rules. The federal government in the United State of America has special bankruptcy courts procedure in every district. Bankruptcy petition can be filed under two different codes.

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