The bankruptcy law helps a debtor to formulate a plan by which he is able to resolve his debts towards his creditors through the division of his assets. Bankruptcy is a legally accepted inability of an individual or an organization to repay the creditors off. A petition may be filed by the creditors as an effort to recover at least a part of what is owed to them. In most cases, however, the process is initiated by the individual or organization that is bankrupt. Through a debtor is enabled to get relief from his debts from the court, either partially or in full. The court may also impose a payment procedure that is consistent with the debtor's financial situation.
The Origin Of The Bankruptcy Law
The word insolvency itself has its origins in the Italy in Europe during the Medieval Period. The word is derived from the term “banca rotta" or “broken bench". Earlier, traders who were unable to meet their debts were dealt with quite harshly in order to recover the debts of the creditors. In the United States of America, liquidation laws were initially temporary measures to tide over severe economic conditions. These laws were later repealed as the economic situation improved. The present day legislative actions pertaining to bankruptcy of corporations have their origins in the Act of 1898. This Act is termed as the foundation of these laws. Now these laws have become permanent and are periodically revised or amended according to the political and economic scenarios.
The modern law is a group of federal laws and statutes which come under the jurisdiction of Title 11 of the American Bankruptcy code. This code was passed by Congress in the Constitution to allow equal laws on liquidation all over the country. These cases come under the jurisdiction of federal laws and these cases cannot be filed in the state court. The concerned proceedings are litigated in and come under the supervision of the United States Courts. State laws, however, need to be followed while filing for bankruptcy and attending the hearings in the federal court.
Types Of Bankruptcy Procedures
Bankruptcy proceedings are basically of two types. Liquidation by filing under Chapter 7 is one option and the other is rehabilitation of the debtor according to proceedings stated in Chapters 11, 12 and 13. It may be filed either by the debtor or the creditors. According to these procedures, the court appoints a trustee to manage the assets of the debtor. The creditors are then forbidden to settle their debts outside the purview of the proceedings. According to bankruptcy laws, the debtor also is not allowed to transfer any property that has been declared as part of the estate as per corresponding proceedings.
A good bankruptcy attorney is the best guide to bankruptcy laws of the United States. You can find them by searching through the advertisements in the newspapers and law magazines and can even search on the internet if you have decided about filing for bankruptcy .