In the United States, federal bankruptcy was designed by congress as a relief measure to persons or organizations who are financially distressed. In other words, in the face of insolvency, an individual or organization can find relief against their debt obligations in federal bankruptcy.
Chapter 7 of the federal bankruptcy code provides for the appointment of a trustee for the liquidation of assets of the debtor for orderly distribution to the creditors. When a debtor’s assets are being liquidated, federal bankruptcy code requires that this should be subject to certain exemptions.
Federal bankruptcy exemptions determine how much property a debtor can keep when they file for Chapter 7 bankruptcy and also the category of items. One of the schedules in a debtor’s petition under the federal bankruptcy code is the schedule of exempt property. In essence, Federal bankruptcy law provides that creditors cannot claim certain properties of a debtor.
In the same manner, the debtor cannot be discharged of some debts. In some states, state exemptions are different from federal exemptions (in the United States). Although each state is permitted by law to adopt its own exemption law, certain states allow Federal bankruptcy exemptions and so a debtor may choose to abide by the federal list of exemptions or by that of their home state. But overall, the state decides which exemption is upheld in a bankruptcy court within that jurisdiction. This underscores congress goal to offer protection to financially distressed individuals or organizations. Married couples may double all exemptions under federal bankruptcy code.
Bankruptcy is something that could happen to anyone. Even big organizations do lose their shirts. Since bankruptcy is something that could actually happen to anybody, our laws provide safety nets for people, municipalities and business entities that have financial difficulties. Chapter 12 Bankruptcy deals with family farmer or fisher folks, Chapter 11 Bankruptcy deals with business reorganization, Chapter 9 talks about municipalities while Chapter 15 focus on ancillary and cross-border cases. Although there are many types of bankruptcy, only two of these types of bankruptcies actually concerns individuals like you. Chapter 7 and Chapter 13 Bankruptcy tell you how you van dissolve you piles of debts.
According to a study in 2007, on the rate of federal bankruptcy and state bankruptcy, businesses are embracing proceedings under state laws rather than federal bankruptcy laws because proceedings under the former is faster, less expensive and more private.
In view of this, the debtor should endeavor to compare Federal bankruptcy exemptions with their states exemptions using the guidance of a solicitor when filling their bankruptcy forms.
Filing Fees For Bankruptcy
Filing for bankruptcy entails some expenses. Just because you are broke that does not mean that you are exempt from court filing fees. However, the good news is that filing fees for individuals are very much lower compared to those filing fees imposed on businesses. For instance, where businesses filing under Chapter 11 Bankruptcy are required to filing fee in the amount of $ 1,039, individuals who are filing bankruptcy under Chapter are only required to pay $ 299 while those who are filing under Chapter 13 gets to pay $ 274. Family farmers and fisher folks also get to pay lower fees compared to big companies. Under Chapter 12 Bankruptcy these people are only required to pay $ 239. Sounds complicated? Not really. If you have experts to guide you through bankruptcy filing and the proceedings that will follow thereafter, you will get through the whole thing without a snag.
No matter the route you choose, guidance and information is very essential. Bear in mind that bankruptcy is not a panacea to financial indiscretion but an opportunity to start afresh and making use of the lessons learnt pre-bankruptcy.