subject: The Process Of Bankruptcy [print this page] The United States constitution under the article 1, section 8 authorizes the congress to enact uniform laws on subject of bankruptcies. Under this law, congress enacted the bankruptcy code in 1978. The bankruptcy code is codified as chapter 11 of United States code. This has been amended several times since it has been enacted. This is a uniform bankruptcy law that governs all bankruptcy cases.
The bankruptcy process is governed by federal rules of Bankruptcy procedure or bankruptcy rules and local rules of each state. Bankruptcy rules contain a set of official forms that are used in bankruptcy cases. The Bankruptcy code and rules set forth the formal legal process for dealing with debt problems of individuals and businesses.
There is a bankruptcy court for each judicial district in each country. Each state has one or more district. There are around 90 Bankruptcy districts around United States. Bankruptcy courts have their own clerks offices. United States Bankruptcy Judge, a judicial office of US district court has the official decision making power over federal Bankruptcy cases. He can decide any matter related to Bankruptcy case like eligibility to file or if the debtor should receive discharge of debt. Most of the bankruptcy process is administrative but is conducted away from courthouse. In cased under chapter 7, 12, 13 and sometimes under Bankruptcy chapter 11 in Dallas, this administrative work is carried out by a bankruptcy trustee.
Debtors involvement with the judge is very limited. A debtor under chapter 7 will not appear in the court and will not confront the judge unless an objection is raised in the case. A chapter 13 debtor may be required to appear only at the time of plan confirmation hearing. Generally, the only formal proceeding at which the debtor must appear is the 341 meeting of creditors that is held at the office of US Trustee where the creditors can question the debtor about debts and property.
The fundamental goal for enacting the bankruptcy law is to give the debtors a financial fresh start and relieve him from the debts. The Supreme Court made a point in its decision for the purpose of bankruptcy law in 1934 decision in Local Loan Co v Hunt, 292 US 234, 244
[I]t gives to the honest but unfortunate debtora new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.
This goal is accomplished through bankruptcy discharge that releases debtor from personal liabilities from certain debts and prohibits creditors from taking any action to collect their debts. The publication describes the bankruptcy discharge in a question and answer format discussing timing and scope of discharge, objections and revocations to discharge. It also describes the rights of debtor in case a creditor tries to collect debts after bankruptcy case is concluded.
Throughout the bankruptcy proceedings you need the services of an experienced and qualified attorney so that you are able to protect your interests in the best possible manner.
