Bankruptcy laws help people who can no longer pay their creditors get a fresh start – by liquidating assets to pay their debts or by creating a repayment plan. Bankruptcy laws also protect troubled businesses and provide for orderly distributions to business creditors through reorganization or liquidation. (From The U.S. Courts website…)
Bankruptcy is a legal process presided over by federal law. These laws were set up by the U.S. Congress for your protection. The U.S. Bankruptcy laws permit individuals and businesses to legally reduce, restructure or completely wipe out their debts, provided they meet specific requirements. The defining body of laws for the bankruptcy process can be found in Title 11 of the U.S. code, which delineates the federal statutes, the process and the courts that may oversee the legal procedures necessary to effect a bankruptcy. Bankruptcy cases are filed in United States Bankruptcy Court: not state court. That said, most of the specifics of your case and the possible exemptions and the exemption-limits depend upon California State law.
Businesses may also file for bankruptcy under Chapter 7, however, if a company wants to remain in business, it must reorganize its debts and use business income to repay its creditors most commonly under Chapter 11.
Bankruptcy Law Definition
Bankruptcy law is a federal legal process for debtors seeking to eliminate or repay their debts. Bankruptcy’s governing federal statutory law is contained in Title 11 of the U.S. Code. It provides for a federal system of statutes and courts which permits debtors to place their financial affairs under the control of the bankruptcy court.
Bankruptcy court is the specialized federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, which are branches of the District Courts of the U.S., and each one’s territory covers several counties.
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