By TheLaw.TV
Bankruptcy, at its core, is a provision of federal law, designed to provide relief to creditors and debtors. Various parts of the bankruptcy code cover individuals, business, farmers, and even municipalities in either completely discharging existing debts or restructuring those debts to provide for their repayment under different terms than the debts were incurred. Proceedings may be voluntary, where the debtor seeks relief, or involuntary where the creditors initiate the process.
Recommended Videos
A straight bankruptcy or liquidation proceeding occurs under Chapter 7 of the Bankruptcy Code. Typically a debtor who can no longer meet its financial obligations must liquidate or sell its assets, with a few exceptions, and use those monies to pay off the creditors. The creditors are usually prioritized in terms of their position for which gets paid in what order, and a trustee pays off the creditors until all the liquidated assets are exhausted. Creditors that are not paid, or paid less than a full amount of their money due, are unable to pursue additional monies from the debtor.
A wage earner's plan or a repayment plan occurs under Chapter 13 of the Bankruptcy Code. Here, an insolvent debtor who meets some statutory earnings requirements (wages, salary, or commission) can submit a plan to pay off all of the debtors existing financial obligations – but have more time to pay off his or her unsecured creditors; this plan must be agreed upon with the creditors and confirmed by the court. If a debtor fails to timely pay off his or her debt under Chapter 13, a liquidation proceeding under Chapter 7 of the code typically remains a viable option.
Bankruptcy courts are specialized federal courts established to oversee bankruptcy proceedings. The judges who serve on bankruptcy courts are federal judges, who unlike Article III judges, are not appointed by the President and confirmed by the Senate for life terms, but rather, are appointed for renewable 14 year terms by a majority of the judges who serve on the United State Court of Appeals in the circuit where the bankruptcy judge will sit. Congress does control the total number of bankruptcy judges, and sets the salary for the bankruptcy judges.
Individuals who are considering bankruptcy often have had difficulty paying off credit cards, resulting in low credit scores and contact with debt collection agencies. The activity of debt collectors is mainly regulated by the Fair Debt Collection Practices Act. While this law is aimed at deterring bad behavior from debt collectors, such as harassment and lying to debtors, it largely leaves the activity of creditors trying to collect on a debt unregulated. Many states, however, similarly regulate the activity of creditors in collecting debts. Individuals sometimes can run up a large debt via identity theft. Family members or strangers may use personal information, such as social security numbers or computer passwords, to assume the identity of another and apply for credit and make purchases in the name of another.
Source: http://thelaw.tv/news/2012/08/11/bankruptcy-law/
PAID ATTORNEY ADVERTISEMENT. This website contains attorney advertising. The choice of a lawyer is an important decision and should not be based solely upon advertisements. THELAW.TV, LLC and our media partner, Berkshire Hathaway, and its parent company and subsidiaries, are not law firms. THELAW.TV is an advertising platform for lawyers. THELAW.TV is not a lawyer referral service or prepaid legal service plan. The sole basis for inclusion of the participating lawyers or law firms is the payment of a flat fee. THELAW.TV and our media partner, Berkshire Hathaway, and its parent company and subsidiaries, do not endorse or recommend any lawyer or law firm who appears on this website. THELAW.TV, LLC and our media partner, Berkshire Hathaway, and its parent company and subsidiaries, do not make any judgments as to the qualification, expertise, or credentials of any participating lawyer, other than to ensure that the lawyer is licensed to practice in their state and is currently a member in good standing of their state bar. No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers. THELAW.TV, LLC and our media partner, Berkshire Hathaway, and its parent company and subsidiaries, provide information designed to help the public better understand the law and the legal process. But legal information is not the same as legal advice, which is the application of law to an individual's specific circumstances. THELAW.TV, LLC and our media partner, Berkshire Hathaway, and its parent company and subsidiaries, do not represent and/or endorse the accuracy or reliability of any information or advice contained in, distributed through, or linked, downloaded, or accessed from any of the materials contained on this website. The legal Q&A videos are informational only and are not intended to provide legal advice. Please consult a lawyer regarding your specific situation. We recommend you consult a lawyer if you want professional assurance that the lawyer's information, and your interpretation of it, is appropriate to your particular situation. You hereby acknowledge that any reliance upon the materials herein shall be at your own risk. Any information you submit to THELAW.TV may not be protected by attorney-client privilege. Thank you.
PLEASE READ THESE TERMS AND CONDITIONS CAREFULLY BEFORE USING THELAW.TV. This site and all content, information and services accessible through it ("THELAW.TV") is made available by THELAW.TV, a Florida LLC, ("THELAW.TV"), and may be used only under the following terms and conditions. BY ACCESSING AND USING THELAW.TV, YOU ("User") AGREE TO BE LEGALLY BOUND BY THE TERMS AND CONDITIONS SET FORTH HEREIN (the "Agreement"). - See more at: http://thelaw.tv/miami/About/disclaimer#sthash.BKSoHKgu.dpuf