Bankruptcy Laws and Bankruptcy Attorneys

Bankrupt Attorney or Lawyer

Bankrupt Attorney or Lawyer

Bankruptcy is a term that is generally used to denote an individual’s or an organization’s inability to repay the loans or other payments to their due recipients owing to complete economic breakdown. With globalization and opening up of markets to private players, cases of bankruptcy have escalated in the last couple of years. Nowadays there are several laws in place to deal with cases of bankruptcy of organizations and individuals. In the United States Bankruptcy Laws are included within the Federal Laws, thus making it possible for the federal government to enforce a uniform law across the country, irrespective of the state where the incident of bankruptcy occurs.

Bankruptcy laws help individuals as well as organizations start afresh in case they are unable to repay their loans. The process involves the liquidation of assets and drafting a repayment plan in order to clear the debts of the creditors. The laws are also designed to facilitate systematic and smooth distribution of funds to creditors through liquidation or reorganization. The implementation of these laws offers a breathing space to economically troubled organizations that are unable to reorganize themselves and start their business afresh once they are declared bankrupt. Bankruptcy laws play an important role in keeping the economy in proper shape and act as a buffer in protecting a complete breakdown of the economy.

As per the Bankruptcy Reform Act of 1978 which came into effect on 1st October, 1979, all Bankruptcy cases in the United States are dealt with a uniform set of laws. Most of the bankruptcy cases in the U.S. are filed under Chapter 7, Chapter 11 and Chapter 13. The federal courts have absolute jurisdiction over cases of bankruptcy and state courts do not have the authority to deal or interfere in such cases. There are several stages that bankrupt organizations need to pass before they are ultimately declared as ‘Bankrupt’.

Chapter 7 of the Bankruptcy Law deals with the provision of liquidation of assets of the organization that is unable to repay the loans. Chapter 7 is by far the most widely used Bankruptcy Law under which most of the bankruptcy cases in the United States are filed. However, with the implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act 2005, filing bankruptcy under Chapter 7 has turned more critical. The Chapter 9 of the Bankruptcy Laws holds provision for the reorganization of municipalities. The Orange County in California and the city of Detroit was declared bankrupt by the virtue of this chapter. Chapter 11, Chapter 12 and Chapter 13 of the law deal with more complex cases of bankruptcy and are designed to allow the debtor to retain a part of his property in order to repay the loan.

Bankruptcy Attorneys

Bankruptcy attorneys specialize in bankruptcy cases and can help clients file a case successfully. Though the U.S. legal system permits a person file a case without the help of an attorney, it is always better to contact a professional attorney in order to avoid complications. A bankruptcy attorney can advise his client on the nature of the bankruptcy and can determine whether to file the case under Chapter 7 or Chapter 11. This would allow the client gain some serious advantage in the case. An attorney needs to be eligible for handling bankruptcy cases and hence a client should always opt for a licensed attorney in order to file a case successfully. Experience also plays an important role in the skill of the attorney; the more experienced an attorney is the better is the chance of having a successful bankruptcy case.

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July 30, 2014