The bankruptcy procedure does not start a local state court. Instead, the official bankruptcy papers are usually presented to the clerk at the Federal court. This is because bankruptcy is a federal process and is governed by the Federal rules for bankruptcy. The law allowing the use of Chapters 7 and 13 is as per the bankruptcy code. The Federal laws for bankruptcy procedure act as a guide to the courts to implement the bankruptcy law.
What does the bankruptcy code consist of?
Bankruptcy code can define the following-
- Eligibility to file a bankruptcy case, answers for who can file
- Outlines the responsibilities of a debtor or the filer
- The responsibilities of the bankruptcy trustee who administers the case
- Affected properties and application of state exemption laws where necessary
- What type of debts shall be released and what type of debts shall be considered as non-releasable?
- How a lender can make a claim
- The prioritization of debts and release of debts based on the lender’s claim
For more in detail analysis of the bankruptcy code, visit Recovery Law Group. The bankruptcy code additionally is divided into several chapters. We see the use of a specific Chapter due to eligibility and other benefits. The different chapters with a brief can be listed as follows-
- Chapter 1 has been designed for general provisions
- Chapter 3 is for case administration
- Chapter 5 defines the lenders, debtor/filer and the estate
- Chapter 7 is straight liquidation of non-exempt assets during bankruptcy
- Chapter 9 refers to re-setup for the municipalities
- Chapter 11 is the re-organization for businesses which applies to individuals doing business as well
- Chapter 12 refers to re-organization for fishery-related individuals and farmers
- Chapter 13 is a payment plan for individuals, which aims at settling dues over the course of 3-5 future years
- Chapter 15 gives insight on cross-border cases and some of the ancillary cases
Federal rules of bankruptcy and the bankruptcy code
Every court in the United States has a rule book which guides its course throughout a bankruptcy case. The Federal rules for bankruptcy help in the implementation part. The Supreme Court was granted authority by Congress to amend and/or write rules that govern the bankruptcy cases. The objective is to enable quick and inexpensive access to justice for all parties. There are different rules outlined by the Supreme Court that help in creating a standard/uniform system in order to enable the objective of quick and inexpensive justice. It is important to note that if there is a conflict amongst the Federal law and the bankruptcy code, the court shall go as per bankruptcy codes. The federal rules can be listed as follows-
- Rule No. 1002 highlights the commencement of the case. It deals with the filer, petition and the selection of an appropriate Chapter
- Rule No. 1005 refers to the caption of the petition. The caption in a bankruptcy case includes basic details of the filer like his name, address and also the court’s name/location in which the case is to be filed
- Rule No. 1006 is with respect to the filing fee. The petition or the document must consist of a filing fee. If the filer is eligible for a waiver of fee or has a request for paying the fee in installment, such document or request must also be added with the petition document
- Rule No. 1007 has all the schedules, timelines, documents, lists, statements, etc. This rule basically explains all the important timelines, statements, and documents that need to accompany the petition before filing
- Rule No. 1008 deals about verification of petition and the documents accompanied with it. The petition and documents filed should be verified by an oath or a declaration (which is usually a signature of ‘I certify’)
Other deviations in bankruptcy rules
There can be some rules enacted by the bankruptcy court that is specific to a particular district. The court has full independence to enact such rules. These rules are usually administrative and deal with the procedure of motion, entering orders, briefing schedules setup instructions, local form filing requirement or instructions, etc. Similar to the local bankruptcy rules, there can be some bankruptcy judge specific rules. The judge’s personal preferences can be articulated as rules in that particular court. These types of rules may include a policy for emergency motion, telephone/video evidence or hearing, court staff interaction, hearings procedure, etc.
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