How Bankruptcy Laws Work

By: Letha Lashley
Even though most people don\'t consider themselves at a financial risk for bankruptcy, the sad statistics are that today more and more people are heading that direction. In fact, the various forms of bankruptcy such as chapter 7, chapter 13, and even chapter 11 are becoming a more popular financial out for people and businesses each and every day.

Congress was the body of lawmakers that decided that the U.S. bankruptcy laws were in need of uniformity and as such they implemented Federal bankruptcy laws that the states are obligated to conform to. Although each state can have its own set of bankruptcy laws there are some basic statutes mandated by the U.S. government that all must follow. These bankruptcy codes have been put in place to help people relieve themselves from financial burden and to cease engaging in financial self destruction.

Within the bankruptcy chapters there are four sections or chapters that lay out the various rules, regulations, and qualifications of each type of chapter or statutes. You are probably familiar with the term Chapter 13 bankruptcy or Chapter 7 bankruptcy. These numbers simply refer to the section of the bankruptcy code that addresses the particular circumstance.

The different bankruptcy chapters such as the ones mentioned above are the details to the various statutes of the bankruptcy codes (such as chapter 7). Each of the various chapters have their own particular nuances as to how the financial burden is relieved and what procedures must be followed in order for that debt to be relieved. In addition there are also stipulations and regulations set forth that the involved creditors must abide by.

Even though there are Federal bankruptcy statutes that each state must follow, each state can still pass its own laws concerning the execution of the bankruptcy proceedings. This as long as these local state laws still fit within the framework of the Federal. In other words, states have the power to establish law concerning bankruptcy but not complete autonomy in doing so.

So, even though the individual states cannot change the intent of the Federal bankruptcy laws, each state can however, interpret how the claims must be filed and how the claims are acted upon.

As is the case with statutes, they tend to be somewhat dynamic; meaning they change with additions and deletions to the code over time as amendments are ratified through the body of lawmakers. Because of this dynamic, it is a very good idea for an individual considering bankruptcy as an option to seek the counsel of an attorney who deals in the area of bankruptcy code.

Any change to the base bankruptcy laws of the U.S. will be originated from Congress itself. An example of such came with the filing requirements of a Chapter 7 bankruptcy. This particular changed effected the primary rules for the filing in that it added additional burden of proof on the person filing to have met the specific criteria and as such would have the right to file for bankruptcy.

With this change, the person seeking relief from the bankruptcy courts will only be approved for filing once they have completed a court approved financial and bankruptcy session. With the ever growing number of people seeking relief from debt via the bankruptcy system, this amendment was added to help ensure that the person filing was truly in a financial dead end and not someone who had just incurred a great deal of debt with no intention of paying it off.

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