Bankruptcy law is federal legislation that determines how a debtor’s property will be distributed to creditors. It also regulates how debts are discharged. It also establishes priority of unsecured claims.
Filing for bankruptcy automatically stays most collection actions, including lawsuits and wage garnishments. However, it does not stay certain types of actions such as repossessions and foreclosures.
Debt slavery
In the early days of the United States, it was common for most states to throw people into jail who could not pay their debts. This practice carried over from England, and even Declaration of Independence signatory Robert Morris served time for failing to pay his debts. However, ideas began to change in the 1800s, when sweeping bankruptcy laws were born. In addition, the Constitution gave Congress the power to “establish… uniform Laws on the subject of Bankruptcies throughout the United States.”
The framers’ attitude that bankruptcy goes hand in hand with regulating commerce marks the beginning of a shift away from a quasi-criminal treatment of debtors. This is why the head of GM won’t be executed, as was the case in parts of ancient Greece. But it also means that he won’t be forced into debt slavery, like the many Jews in Dark Age England.
Nevertheless, the concept of debt slavery still exists today in some situations. This is especially true in developing countries, where debt bondage (also called bonded labor) and peonage are real issues. In these instances, a lender may demand services indefinitely, and this form of enslavement can last generations. Moreover, creditors can also transfer their claims to family members. This type of exploitation is a serious problem in India, and many NGOs are working to eradicate it.
Statute of bankrupts
Law is a vast field, and not all areas of the law are the same. Bankruptcy law is no exception. One question many people have is whether bankruptcy has a statute of limitations. The answer is yes, but it’s not the same as a statute of limitations for a lawsuit or a criminal charge.
The United States Code and Federal Rules of Bankruptcy Procedure govern bankruptcy cases. Local rules of practice and procedure adopted by the individual bankruptcy courts supplement the Federal rules. In some states, there are also state laws governing the law of bankruptcy. These laws can vary, but most allow for a debtor to discharge some of their debts and give up secured property. Some debts, however, cannot be discharged, including most taxes and alimony and child support.
A Chapter 7 debtor surrenders nonexempt property to a trustee, who liquidates the assets and distributes them to creditors. The debtor is generally not allowed to keep any of the property he or she owns, including the home and cars. However, there are some assets that are protected from sale, such as a debtor’s individual retirement account and tools of the trade. In addition, individuals may protect varying amounts of their home equity and vehicles.
A bankruptcy case can be complicated, so it is important to seek legal advice from a licensed attorney before filing for bankruptcy. Although this guide is a good starting point for California residents, it should not be considered legal or financial advice.
Exemptions
The right exemptions can prevent you from losing all of your property in bankruptcy. Exemption laws are found in both the Bankruptcy Code and state law, and vary by state. They protect your property from being taken by the trustee of a bankruptcy case to pay your creditors. To protect your property, you must claim the appropriate exemption in your bankruptcy petition.
The first exemption to consider is the homestead exemption. This exempts the equity in your home up to a certain amount, and can be doubled for married debtors filing jointly. This is the main protection against foreclosure. Other exemptions include the equity in a car, household goods, furniture and some income. IRAs and other retirement savings are also protected.
However, some secured debts (such as a mortgage or auto loan) retain their security interests even after a bankruptcy discharge. In this situation, a debtor may choose to “reaffirm” the debt and promise to continue to pay it. Alternatively, the debtor may be able to avoid a lien or security interest by seeking an adjustment of debts under chapter 13 of the Bankruptcy Code.
A consultation with a debt-reduction specialist can help you determine whether or not a particular asset is exempt from bankruptcy. You will need to know the type of property you own and its resale value, as well as the names and addresses of your creditors and how much you owe.
Filing for bankruptcy
The bankruptcy process is a legal procedure for dealing with debt problems of individuals and corporations. It is regulated by federal law and administered by the U.S. Court of Federal Claims. The court appoints a trustee to oversee the case and ensure that all paperwork is filed correctly. The trustee also looks for any nonexempt property that can be sold to pay creditors.
Bankruptcy is a complex process and you should consult with a bankruptcy attorney before filing for bankruptcy. You should also try to find out if there are ways you can solve your financial problems without declaring bankruptcy. You can do this by reducing expenses, increasing income or getting a better interest rate on loans.
When you file for bankruptcy, the court immediately stops all lawsuits, foreclosures, garnishments, and other collection activities against you. The judge will review your financial records and then make a decision about whether to approve or reject your bankruptcy.
The bankruptcy process can take anywhere from a few months to several years. In the end, a judge will determine if your debts can be discharged and if you will need to repay secured debt. The bankruptcy will remain on your credit report for seven or ten years, and it may be difficult to obtain further credit. However, if you have a valid reason for filing, it is worth the effort.