Amongst bankruptcies, debtors usually opt for Chapter 7 and Chapter 13 bankruptcies, since they provide the maximum benefits. Bankruptcy is a process, which involves litigation and lawyers and courts. The process can be trying, and it is important to expedite the legal option to avail the maximum benefit. That is where the problem comes in. Individuals do not have enough experience or the expertise to conduct the process on own. Special help is needed. So debtors hire specialists who have the background, and the expertise to deal with bankruptcy courts. Individuals who can represent the respondents and avail a favorable result. Bankruptcy attorneys are such experts. Bankruptcy lawyers help to get debt relief, and provide valuable information, services, as well as advice to help the debtor find beneficial financial options. The part one of this article provides some general information pertaining to bankruptcy and bankruptcy lawyer.
The bankruptcy process can be briefly described as a special legal proceeding in which an exclusive court undertakes, and administers the fixed, as well as movable assets of a debtor for the benefit of the creditors. Typically a debtor, or any person or business, who is indebted and owes money to others, can choose to file for bankruptcy proceedings, so as to solve a financial situation involving a debt condition which is out of control, or alternately to prevent recovery of debts for a certain period of time, during which the individual or the business can make arrangements to repay the debt.
The United States Constitution provides powers to the Congress to draft and execute laws and acts related to bankruptcy and bankruptcy related issues as per Section 8 of Article 1. Based upon this empowerment, the Congress passed the “Bankruptcy Code” in the year 1978. The act or the code has been amended several times over the decades, as per the changes taking place in the financial market, and the redemption capacity of the debtors. The actual procedure is governed by the body known as the Federal Rules of Bankruptcy Procedure. The body has set up special courts to deal with bankruptcy issues, as well as litigations. The courts are popularly known as bankruptcy courts. These courts operate depending upon their jurisdictions. The Federal body has set up official proceedings and working guidelines for these courts. There are rules dealing with various aspects of bankruptcy. The rules are specially created so the litigations can be carried out in an effective manner between individuals and business concerns. From the functioning point of view, bankruptcy courts are appointed for each judicial district within the state. And litigations, as well as legal procedures are carried out with the litigants based upon the particular area or location of the registered business. All decision relating to the legal proceedings are taken by the judge, and he or she has several officers to aid the legal work. The majority of the bankruptcy litigations are administrative in nature, and are often conducted outside the court premises. In case of special chapters and issues such as Chapter 7 Bankruptcy, Chapter 11, Chapter 12, and Chapter 13 Bankruptcy, the administrative procedures are handled by a trustee appointed by the court to overlook the particular case.
Kinds of bankruptcy
As per the constitution, the Federal Rules of Bankruptcy Procedure offers five basic types of facilities, or clauses, under which an individual or a company can file for bankruptcy. The clauses or facilities are referred to as chapters. As per the Federal bankruptcy law, the different chapters are briefly explained as follows:
* Chapter 7 – Straight Bankruptcy
This chapter involves proceedings and litigations, which result into complete or total liquidation of the debtor’s assets.
* Chapter 9
Provides a special provision through which municipal bodies and governments can file for bankruptcy.
* Chapter 11 – Business Bankruptcy
This option is generally preferred by consumer debtors, but does not provide any special advantages as compared to Chapter 7 or Chapter 13.
* Chapter 12 – Family Farm Bankruptcy
This chapter is suitable for family farms related debts and bankruptcies. For further information, one should check out the Agricultural Law Act: Family Farm Bankruptcy.
* Chapter 13 – Wage Earner Bankruptcy
This chapter helps to make the payments of debts in accordance to a repayment plan.