Bankruptcy is a declaration of person or business of a legal status of inability to pay creditors. Involuntary bankruptcy and voluntary bankruptcy are to two types. Involuntary is filed by a creditor or creditors in an attempt to recover money that is owed to them. An involuntary bankruptcy petition may not be filed against an individual consumer debtor who is not engaged in business. On the other hand, voluntary is initiated by the debtor.
Bankruptcy in America is a matter placed under Federal jurisdiction by the United States Constitution, which allows Congress to enact “uniform laws on the subject of bankruptcies throughout the United States.” The Congress has enacted statute law governing bankruptcy, primarily in the form of the Bankruptcy Code, located at Title 11 of the United States Code. Federal law is amplified by state law in some places where Federal law fails to speak or expressly defers to state law.
Bankruptcy cases dealing with the validity of exemptions are likely dependent upon State law. Although the all cases are file in the U.S. Bankruptcy Court. So both federal and state laws play a vital role in many bankruptcy case. Due to the fact that each state has its own list of exemption the specific out come of bankruptcy case may different in each state.
There are two basic forms of relief a debtor can claim when bankruptcy is filed. Chapter 7 is the chapter of the Bankruptcy Code providing for “liquidation,” It provides for the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors. Chapter 13 allows individuals to undergo a financial reorganization supervised by a federal bankruptcy court. The Bankruptcy Code anticipates the goal of Chapter 13 as enabling income-receiving debtors a debtor rehabilitation provided they fulfill a court-approved plan.
Debtors should learn the benefits of both to determine which is best. Learn more about Chapter 7 vs. Chapter 13 Bankruptcy Before making decision your consult with an attorney to assist you in determining which is best.
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