Federal Bankruptcy Law – Discharged From Legal Obligation

January 11th, 2021 by admin Leave a reply »

Bankruptcy laws provide to debtors in various ways and help them to start a fresh for their financial career. The American state has various bankruptcy laws like the Ohio bankruptcy laws, the Michigan bankruptcy laws etc. the bankruptcy laws of the United states of America is under the federal jurisdiction and under the constitution of united states the article 1 section 8. But its implementation is states decision and can be interpreted accordingly. The relevant points of the federal bankruptcy law are recorded under the bankruptcy code.

The federal bankruptcy laws consist of various clauses and chapters like chapter 7, chapter 11, chapter 12, chapter 13, and chapter 15. This chapter accounts various cases of bankruptcies depending upon the size of the debt and its type.

Depending on debts the person files for bankruptcy. Chapter 7 includes the most common form of bankruptcy that of liquidation. Chapter 9 includes those cases of municipal bankruptcy. Chapter 13 includes business debtors and persons with huge amount of debts. Chapter 12 provides relief to families of fishermen and farmers. Chapter 15 includes various international cases of debts and other ancillaries.

A person can declare himself as a bankrupt under various circumstances. Situations can be that of firm liquidation, credit card burden, major financial set backs etc. but before filling for bankruptcy a person may consider its ill effect like he will have to pay more tax, his insurance will go up and financial institution will see him as high risk asset.

But bankruptcy also does one to get rid of debts and make fresh start for his financial career.

Like all laws, federal bankruptcy laws are also subjection of change with change in scenario. The bankruptcy law changes are subjected to meet the rising number bankruptcy cases in America. Congress has made changes to the law keeping in mind that Americans are more debt ridden than they were ever before in the history. The new bankruptcy law has made it more difficult for debtors to get stay orders. Its now more costly and complicated for debtors to file for bankruptcy and to obtain stay orders. Debtors are subjected with lot of uncertainty under the new set of federal bankruptcy laws.

The basic objective and perception of the law has changed from the fact its new consider the debtor plea abusive until and unless the debtors proves it otherwise. But bankruptcy does help the debtors too.

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