The U.S. Bankruptcy Code generally governs bankruptcy filings by individuals, businesses, municipalities, and other entities. It is a broad set of laws that has numerous chapters and provisions. It is one of the more complicated branches of U.S. law, and is often the main source of law for most bankruptcy lawsuits.
Some of the more commonly cited chapters in the bankruptcy code are chapter 7 and chapter 13. Chapter 7 governs “liquidation” bankruptcy, which essentially grants the person a fresh start by canceling most of their debt. Chapter 13 governs “reorganization” bankruptcy, which allows the party some time to reorganize their finances before they begin addressing their outstanding debt.
What are Some Legal Issues to Consider When Filing for Bankruptcy?
Bankruptcy filings can often be somewhat complex. This is because they frequently involve legal issues from various other areas of law. Also, the bankruptcy code is frequently changing, and can lead to newer complexities over time.
Some legal issues to consider before filing for bankruptcy include:
- Chapter 7 vs. Chapter 13: As mentioned, filing under a different chapter can result in very different outcomes. You should understand the difference between Chapter 7 and 13 before filing for bankruptcy.
- Filing Multiple Times: The bankruptcy code has restrictions on the amount of time that you must wait in between bankruptcy filing. For instance, if you have recently filed for bankruptcy, you may have to wait a certain number of years before you can file again if needed.
- Individual vs. Business: The bankruptcy code has major differences when it comes to individual bankruptcy filings as opposed to business bankruptcy claims.
- Changes to the Bankruptcy Code: Newer changes to the code have resulted in major adjustments. Some of these include income calculations and other guidelines; you may wish to consult with a lawyer if you have any questions about the recent changes.
- Voluntary vs. Involuntary Filings: Most people file bankruptcy voluntarily, in order to obtain certain tax breaks or debt cancellation. However, some bankruptcy filings are involuntary, meaning that they are ordered by a court. If that’s the case, the overall proceeding can be different (they sometimes involve liens and other property issues).
Thus, bankruptcy filings can be very different depending on the financial history of the parties involved. Also, state laws may be different when it comes to various other related laws, especially property laws, and those laws related to divorce and shared property.
Do I Need a Lawyer if I Have Questions About the Bankruptcy Code?
Understanding the U.S. Bankruptcy Code can be difficult even for professionals. You may need to hire a bankruptcy lawyer if you have any questions at all regarding bankruptcy filings. Your attorney can advise you on your legal rights under the bankruptcy code. Also, your lawyer can represent you in court during formal bankruptcy hearings and proceedings.