8 Things To Know About Bankruptcy Laws
What are Bankruptcy Laws?
1. Bankruptcy laws regulate and define various bankruptcy options, which offer individuals and business entities the ability to restructure or liquidate their assets to fulfill mounting debt obligations.
2. Bankruptcy laws aid individuals or business entities who can no longer fulfill their debt obligations. These individuals or business entities will file for bankruptcy to either restructure their debt obligations or to liquidate their assets. Through liquidation, the proceeds are taken from the sale of the debtor’s assets and then used to pay-off their underlying creditors.
3. Bankruptcy laws were also created to protect failing or troubled businesses and to provide for orderly distribution to creditors through the reorganization or liquidation processes.
4. The majority of bankruptcies are filed under the three dominant chapters of the United States Bankruptcy Code—Chapter 7, Chapter 11 and Chapter 13.
5. The United States Federal Court system possesses exclusive jurisdiction over bankruptcy cases. This means that all bankruptcy cases cannot be filed in localized or district court systems.
6. Bankruptcy law is the legal framework that provides the necessary groundwork for any individual or business entity who may find themselves in a position where they are no longer able to fulfill their debt obligations. The reasons for filing bankruptcy are numerous; individuals or business entities can face insurmountable debts as a result of failed business ventures, investments, or simply by overextending their spending habits.
7. There are many different forms of bankruptcy. However, each program is governed by bankruptcy law. As a result of this relationship, bankruptcy laws are the regulatory field of legal issues which enforce, regulate, and administer bankruptcy filings. Without a scope of law to regulate bankruptcy, the system would be disheveled and individuals or business entities that face severe debt would be unable to seek relief.
8. Filing for bankruptcy is not a cut and dry solution. The aftereffects of filing for bankruptcy will result in either the liquidation of the debtor’s assets or a negative credit rating. As a result of the implications associated with bankruptcy filings, it is necessary to understand the laws associated with the Bankruptcy programs.
Legal Issues Associated with Bankruptcy
1. In order to comprehend and evaluate bankruptcy laws, you must engage the services of a legal professional. Legal professionals, such as bankruptcy attorneys, will facilitate your claims through an advanced knowledge of bankruptcy laws.
2. As a result of the Federal status of bankruptcy filings, the laws associated with claims do not waver based on local interpretation. That being said, bankruptcy laws will vacillate and vary based on each individual case, circumstance and the type of bankruptcy filing you choose to initiate.
3. Before filing for bankruptcy you must understand the unique intricacies of each bankruptcy option. A Chapter 7, Chapter 11, Chapter 13, as well as the other forms of bankruptcy claims possess unique traits that will alter your business, your assets, and the after effects of the filing.
