Bankruptcy Law

Bankruptcy law is a branch of law that provides individuals the opportunity to eliminate or reduce certain debts. Bankruptcy provides an opportunity to these individuals to repay their non-dischargeable debts over time by providing a repayment timeline. It not just provides the individuals an opportunity to repay non-dischargeable debts, but it also provides individuals and organizations the opportunity to repay their secured debts. These secured debts may include vehicles pledged as collateral, or debts with real estate which can be paid off to the borrower on more favorable terms.

Bankruptcy law is contained in Title 11 of the United States Code of the federal statutory law. Bankruptcy Code was passed by the Congress under its Constitutional grant of authority to "establish... uniform laws on the subject of Bankruptcy throughout the United States." Bankruptcy laws are not regulated by the states, but the states may pass laws that govern other aspects of the debtor-creditor relationship.

The United States Bankruptcy Courts, which are part of the District Courts of The United States, supervise and litigate all bankruptcy proceedings. Congress also established the United States Trustees in order to handle the administrative and supervisory duties of bankruptcy proceedings.

Types of Bankruptcy

There are 5 types of bankruptcy:

Chapter 7 - This type of bankruptcy is always available to individuals who have business debts. It allows for cancelation of unsecured debts, such as personal loans and credit cards. Individuals filing for Chapter 7 need to meet certain income requirements otherwise they won't be able to file a petition for Chapter 7.

Chapter 9 - Chapter 9 allows for the reorganization of municipalities and related entities such as school districts and county-owned hospitals. This type of bankruptcy is only for municipalities, and not for corporations or individuals.

Chapter 11 - Chapter 11 bankruptcy provides a number of options to reorganize debt. It is the most comprehensive type of bankruptcy and allows the individual to repay some debts, cancel other debts, and restructure other remaining debts. The only drawback of this type of bankruptcy is the relatively high filing fee, therefore individuals favor Chapter 13 or Chapter 7 bankruptcies.

Chapter 12 - Chapter 12 bankruptcy provides restructuring of debts for family farmers. The bankruptcy type shares many characteristics with Chapter 13 bankruptcy.

Chapter 13 - Chapter 13 bankruptcy allows the discharge of certain debts along with repayment of other remaining debts over a period between 3 to 5 years. The bankruptcy may also allow a reduction in principal owed on secured debts. In other cases, it may eliminate those debts completely. Chapter 13 may also be used to structure a repayment plan for debts that cannot be otherwise discharged in bankruptcy. Chapter 13 only allows individuals to file this chapter, organizations and companies are now permitted to file under this chapter.

Once thing to note about all these bankruptcy types is that they do not allow student loans, criminal restitution, or child support to be discharged or eliminated. They have to be paid in full by the borrower during the course of the bankruptcy. For more information on the type of bankruptcy suitable for you, contact a qualified bankruptcy attorney.

Our Bankruptcy Attorney Ames, IA has dedicated their lives to the craft and stand by your side throughout the entire case, should you have any questions or concerns about the process.

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