What is Bankruptcy?
Bankruptcy is a legal proceeding in federal bankruptcy court where certain debts can be adjusted or eliminated depending on the particular facts of each case and the particular chapter under which the case is filed. All bankruptcy cases are governed by uniform federal law known as the “Bankruptcy Code”. The Bankruptcy Code is divided into numbered chapters. Bankruptcy cases can be filed under Chapter 7, 9, 11, 12, or 13. Each of these Chapters has specific requirements and allows for specific forms of relief from debts. The fundamental intent of Congress in passing the Bankruptcy Code was to give “honest but unfortunate” debtors a “fresh start” in situations where debtors are overcome with debt.
It is commonly heard that an individual or business has filed Chapter 7 or Chapter 13. This means a case was filed under the laws of Chapter 7 of the Bankruptcy Code or under the laws of Chapter 13 of the Bankruptcy Code, but for convenience it is simply referred to as filing Chapter 7 or filing Chapter 13.