U.S. bankruptcy laws fall under federal statutory law provided by Title 11 of the United States Code. They have been periodically revised and amended to provide full and fair cover for genuine cases and to eliminate the potential for their unlawful abuse. Since this is federal jurisdiction, individual states cannot pass legislation governing and regulating bankruptcy. US bankruptcy laws have been standardized so as to have universal application. However, state governments can lay out parameters for the definition of personal insolvency and indebtedness.
The Supreme Court formulated US bankruptcy laws in consultation with Congress, and all supervision and administration of bankruptcy proceedings fall under its jurisdiction. The two fundamental kinds of bankruptcy in the United States are Chapter 7 and Chapter 13 bankruptcy, which have been explained in some detail earlier.
In filing for either Chapter 7 or Chapter 13 bankruptcy, a debtor’s obligations may vary to some degree depending on the circumstances. In Chapter 7 bankruptcy, the filing party is required to make a full disclosure of assets and liabilities, including secured and unsecured property. Within 30 days of making an application, the applicant must declare whether he/she intends to retain or surrender such assets. These intentions must be executed within 45 days of filing.
The applicant must further provide a complete list of creditors, after which the bankruptcy court arranges for a meeting of the applicant with all mentioned creditor. During this meeting, all their doubts can be raised and must be addressed to their satisfaction.
Chapter 13 bankruptcy can be initiated by either the debtor or his/her creditors. After filing, a trustee is appointed to supervise the debtor’s assets. Effectively, these are then immovable asset which can neither be sold nor transferred.
US bankruptcy laws basically benefit the applicant debtor, and since recently enforced amendments, the interests of creditors are given equal priority.
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