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Bankruptcy Basics
The Bankruptcy CodeThe bankruptcy code was enacted by Congress in 1978. Bankruptcy procedures are governed by the Federal Rules of Bankruptcy. There are also local bankruptcy rules that vary from state to state. These rules define the legal procedures for dealing with the debt challenges of both individuals and businesses. One of the main purposes of bankruptcy is to give the debtor a chance to either organize their debt in a managable fashion, or to "clear the slate" so the debtor may move forward without the burden of creditor harrasment and some of the potential legal consequences that are associated with unmanageble debt. The Bankruptcy ProcessThe bankruptcy process for an individual filing for any of the common chapter bankruptcies such as Chapter 7 or Chapter 13 is mostly an administrative process and takes place outside of a courtroom. The bankruptcy procedure is primarily administered by a trustee of the court that is appointed to oversee the bankruptcy case. In many cases the only appearance the person filing for bankruptcy, (known as the debtor) will have to make is held at the offices of the U.S. trustee. This meeting known as the “341” meeting and is attended by creditors (to whom the money is owed) and you the debtor. During this meeting the creditors may question the debtor regarding property and debts that are owed.
The Purpose of BankruptcyThe primary purpose of bankruptcy law is to give those who are in debt beyond their means a new beginning without the burden of harassment by creditors or court actions that could occur without the protection of bankruptcy laws. This primary purpose is realized though what is known as a bankruptcy discharge. Bankruptcy DischargeA bankruptcy discharge removes the personal liability of the debtor from certain debts and halts any actions by creditors to collect the debts owed. The subject of discharge is covered in more detail in the bankruptcy discharge section of this website. Information on this WebsiteThis information has been prepared for individuals who are considering filing for bankruptcy. This information should not be considered a substitute for legal council as bankruptcy laws may change and differ from state to state. If you are interested in the legal details of these terms please visit the U.S. Courts Bankruptcy Website and start with the United States "Bankruptcy Basics" page. Otherwise feel free to do an Internet search of your own |
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