State Bankruptcy Laws

In the U.S., bankruptcy is under federal jurisdiction of the United States Constitution, allowing Congress to establish uniform laws on the subject of bankruptcies across the country. Federal law is often supplemented or amplified by state law in places where Federal does not apply or is unclear.

Although bankruptcy cases are always filed in United States Bankruptcy Court, bankruptcy cases, especially where they deal with the validity of claims and exemptions, often rely heavily upon individual state laws. Thus, state bankruptcy laws often play an important role in many bankruptcy cases, regardless of the chapter under which they are filed.  It is vital that your bankruptcy attorney, regardless of whether you are filing a Chapter 13 or Chapter 7 bankruptcy, is experienced with the bankruptcy laws in the state in which you file. It really is not possible to generalize about bankruptcy statutes from state-to-state.

A person (or couple) who is no longer able to pay their creditors is allowed to declare bankruptcy to obtain relief from their overwhelming debt.  This is often achieved through Chapter 7 bankruptcy, in which all applicable debts are discharged, or through Chapter 13 bankruptcy, which is considered debt restructuring, where the filer agrees to repay the creditors through a court-approved, three-to-five-year debt payment plan.

There are also bankruptcy laws that protect businesses that have either failed or need the assistance of the bankruptcy process to provide a reorganization of their finances by providing orderly distributions to business creditors, again either through liquidation or restructuring.

Most cases are filed under the three main chapters of the Bankruptcy Code – Chapter 7, Chapter 11 and Chapter 13.

Bankruptcy starts when the debtor files a petition with the bankruptcy court in his or her home jurisdiction. A petition may be filed by an individual, a married couple or by a corporation or other business entity. The filer must provide statements listing assets, income, liabilities and the names of all creditors, as well as the amount of the debt. The bankruptcy filing automatically prevents debt collectors from taking any action against the debtor and the debtor’s property. While the stay is in effect, it is against the law for creditors to bring or continue lawsuits, make wage garnishments or even make telephone calls demanding payment. The Fair Debt Collection Practices Act, an amendment to the Consumer Credit Protection Act, provides legal protection from abusive debt collection practices.

When you file Chapter 7 or Chapter 13 bankruptcy, you need a bankruptcy lawyer with extensive experience and a national reputation on your side. Call today to speak with a knowledgeable and compassionate bankruptcy representative from Client First Bankruptcy toll-free at 800-383-6004.