Bankruptcy in the United States
Unfortunately bankruptcy is a fact of life for to many. However with a bit of planning one can get through it if it must be undertaken.
Bankruptcy in the United States is a matter placed under Federal jurisdiction by the United States Constitution (in Article 1, Section 8), which allows Congress to enact "uniform laws on the subject of Bankruptcy throughout the United States." Its implementation, however, is found in statute law. The relevant statutes are incorporated within the Bankruptcy Code, located at Title 11 of the United States Code, and amplified by state law in the many places where Federal law either fails to speak or defers expressly to state law.
While bankruptcy cases are always filed in United States Bankruptcy Court (an adjunct to the U.S. District Courts), bankruptcy cases, particularly with respect to the validity of claims and exemptions, are often highly dependent upon State law. State law therefore plays a major role in many bankruptcy cases, and it is often quite unwise to generalize bankruptcy issues across state lines.
There are six types of bankruptcy under the Bankruptcy Code, located at Title 11 of the United States Code:
- Chapter 7 (a liquidation-style case for individuals or businesses),
- Chapter 9 (Municipal bankruptcy)
- Chapter 11 (a more complex rehabilitation-style case used primarily by business debtors, but sometimes by individuals with substantial debts and assets)
- Chapter 12 (a payment plan or rehabilitation-style case for family farmers and fishermen)
- Chapter 13 (a payment plan or rehabilitation-style case for individuals with a regular source of income)
- Chapter 15 (ancillary and other cross-border cases)
The most common types of personal bankruptcy for individuals are Chapter 7 and Chapter 13.
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