subject: Bankruptcy Law A Simple Manual For Beginners To Identify With [print this page] Although bankruptcy law is not a fun subject, and is actually quite complex, simplifying the idea behind this, is what we are achieving to aim with this brief article. In short, bankruptcy is a legal declaration that a individual or organization is unable to pay their creditors.
In short, a lawful provision for the resolution and part payment of outstanding debt! Bankruptcy sees the assets of the debtor sold and the proceeds divided to pay creditors, and for this to happen the debtor needs to have assets. If they have none a bankruptcy is not allowed. Creditors also rarely are paid in full unless the division of the assets allows for this.
The debtor is not allowed to remain in business in order to pay theses debts, although on occasion this type of bankruptcy has been allowed. Traditionally all assets sold and the revenue generated is then divided to resolve debt issues. A bankruptcy therefore discharges the debtor legally of their obligation to the debt, even if the creditors do not receive their full due.
In the US a special court system takes care of this; the US Bankruptcy Courts! They appoint a trustee and are a section of the district courts. The laws for this matter were promulgates through Congress and the laws evolve from the Supreme Court.
There are 90 bankruptcy court districts in the US with most states having more than one district. It is a US judge who makes a decision for discharging the debt and it is a very serious matter.
Most of a bankruptcy matter is handled out of court and it tends to be purely administrative. The trustee will oversee each individual case and handle it according to the chapter under which the bankruptcy is filed. Every chapter has some relevance to the particular type of filing taking place and the most common are chapters 7, 12, and 13, with chapter 11 sometimes playing a role.
