All bankruptcy cases in the US are governed by the Bankruptcy Code. The Bankruptcy Code is codified as title 11 of the United States Code by Congress. All bankruptcy procedures in the US work according to the Bankruptcy Rules(the Federal Bankruptcy Rules) and local rules of bankruptcy in each district of different states. Bankruptcy lawyers Fargo ND are knowledgeable about the Bankruptcy Code and the relevant Bankruptcy rules. The fundamental purpose of bankruptcy laws in the US is to enable the debtor to make a “fresh start.”
The decision-making powers in bankruptcy cases rest with the United States bankruptcy judge and a judicial officer of the district court.
The bankruptcy judge decided bankruptcy matters such as:
- Eligibility to file a bankruptcy case.
- If the debtor should receive the discharge of debts.
Most bankruptcy cases are settled out of court. However, in cases under chapters 7, 12,13, and sometimes chapter 11, the cases are supervised by an appointed trustee.
A debtor under chapter 7 will not appear before the bankruptcy judge except if an objection is raised in the case.
Debtors who have filed for bankruptcy under chapter 13 will need to appear before the bankruptcy judge if there is a planned confirmation hearing.
In most bankruptcy cases the debtors may not need to face the creditors. Only when the matter is taken to the trustee for settlement, the debtors and creditors will need to be present. Such meetings are referred to as ‘341 meeting’. This is because section 341 of the Banking Code allows creditors to question the debtors regarding the debt and assets.
The bankruptcy discharge issued releases debtors from any personal liability from specific debts. This discharge also prohibits the creditors from taking any action to retrieve these debts from debtors. The bankruptcy is a detailed document that specifies the debts that are discharged and those that are not. It also includes details such as the date and scope of the discharge, objections to the discharge, and revocation of the discharge. The discharge also specifies what action the debtor can take in case the creditors try to collect the discharged debt.
There are six types of bankruptcy cases under the Bankruptcy Code that individual bankruptcy can fall under. A bankruptcy law firm Fargo ND advises his client on the appropriate type according to his specific case.
This is also known as Liquidation. According to Chapter 7, there is a court-supervised procedure through which the trustee takes possession of the debtor’s assets and converts them to cash. The creditors’ loans are settled using this cash. However, the debtors may have the right to retain the certain exempt property.
This is entitled as Adjustment Debts of a Municipality. Chapter 9 entails the reorganization of property of the debtor filed by the Municipality. The debtor can continue to operate his business and repay the Municipality as directed by the court. The Municipality includes cities, towns, villages, counties, etc.
This type of bankruptcy case is known as reorganization. As per Chapter 11, the debtor can continue to operate his business as long he repays the creditors concurrently as specified by the court.
Chapter 12 is also known as Adjustment of a Family of Farmer or Fisherman with a Regular Annual Income. This chapter is specifically for providing debt relief to the family of farmers or fishermen. The debtor is given time to repay the debt. The maximum period allowed for repayment of debt is 3 years. In some cases, exceptions may be made and the period of 5 years may be granted for repayment of debt.
This chapter is entitled Adjustment of Debts of an Individual With Regular Income. According to Chapter 13, the debtor can retain certain assists like his home, etc. and he is given 3-5 years to repay the debt. However, the application for bankruptcy under Chapter 13 is approved by the court if it satisfies all the terms and conditions of the code.
Chapter 15 is entitled Ancillary and Other Cross Border Cases. This chapter manages cross-border bankruptcy cases. According to Chapter 15, the debtor and his property are governed by the laws in the US and one or more foreign countries. The bankruptcy process and laws can be quite complicated. Consult the expert bankruptcy lawyers Fargo ND, at Ward K Johnson Law Firm!