Bankruptcy laws are recognized in the US constitution, and over the years, these laws have undergone numerous changes. However, even though there are regular changes, Article 1, section 8, clause 4 of the US Constitution authorizes the Congress to create bankruptcy laws that are uniform throughout the country. Personal bankruptcies fall under Chapter 7 and 13 of the constitution while business bankruptcy falls under Chapter 11.
All bankruptcy cases must be filed in a federal court only, and not a state court. The cases filed are heard by a bankruptcy judge who is appointed to serve a period of 14 years by US court of appeals for that district. Having some knowledge of bankruptcy laws is essential because it can help you to determine where to start, what to do and whom to consult. You should read relevant materials and seek help from experts to keep you updated with bankruptcy.
How a bankruptcy case get started
To start a bankruptcy case, a debtor files a petition with an appropriate court listing the assets, liabilities, incomes as well as the names and addresses of all his or her creditors and how much he or she owes them. When a debtor files a petition, it prevents or delays creditors from collecting a debt or claiming property from the debtor. After a debtor has filed a petition, creditors then receive a notification from the court clerk where the debtor has filed his case. After a thorough assessment, the case determines whether the debtor can or cannot be able to pay the debt. If the court decides that the debtor has little money to repay the debts, the judge may discharge most of the debts without any objection. After the debt is discharged, the debtor is no longer liable to his or her creditor, and hence the creditor can no longer contact the debtor about the debt or try to recoup it in future. However, a debt discharge does not apply to a secured debt, e.g., that of a car. This means that the debtor has to repay the debt or the car get recouped to repay the debt.
How bankruptcy debts are settled
If in any case a dispute over anything, a trustee who may be a private or a corporation can supervise property liquidation, oversee repayment plans or even make distributions to creditors. Some cases where disputes arise from include:
Who owns the certain property?
How much money should be paid to each creditor?
The debts that should be discharged
Trustees serve as officers of the US Department of Justice, and they are appointed by either US Trustee or bankruptcy protection attorney. After the role of trustee was expanded by the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, a trustee can now consider whether the debtor can pay the debt under a Chapter 13 plan. A trustee should also ensure that the debtor receives credit counseling and financial education to avoid similar occurrences in the future. After a bankruptcy court has made a decision, an appeal is only available in a district court or by a Bankruptcy Appellate Panel (BAP).
Since bankruptcy is a complicated process which has long-lasting effects, debtors are highly recommended to seek legal advice from professionals before filing a petition. There are numerous websites offering bankruptcy information and procedures to be followed. You need to research thoroughly and dedicate your time to follow the entire process until the end. You can also hire a Las Vegas bankruptcy lawyer to help you with the process if you don’t know how to go about it.