Bankruptcy is a legal process which allows a debtor applying for it to either discharge his debt or pay the debt in portions over a period of time. This process is adopted at times where the debtor owes more money than his ability to pay back.

The Bankruptcy Code (Title 11 of the United States Code 11 U.S.C. sections 101-1330) and Federal Rules of Bankruptcy Procedure apply to the procedure and eligibility for Bankruptcy. The rules also determine which chapter one is eligible to file, whether the debts can be eliminated, which possessions can be kept, etc.

It is true that the personal Bankruptcy laws in the US favour the debtor but it must also be stated that the favour is tilted towards the debtor in definable limits.

The overall purpose of personal Bankruptcy is to give the debtor a fresh start. The federal and state Bankruptcy laws in the U.S.A. secure the position of debtor and by providing different sets of rules for various types of debts. In case of secured debts, a debtor is allowed to give up the security to get rid of the debt, or pay the debt and keep the security.

The debtor is protected in the sense that if a debtor has taken a second or third mortgage and the asset kept as security is not worth the value of the first mortgage, Bankruptcy laws let that debtor pay only the first debt and strip off the other debts.

In some Bankruptcy programs, a debtor can pay back taxes with no interest or penalties and even discharge older taxes.

It is not the case that only the rights of debtors are protected. In fact, all the creditors have the right to be heard with reference to the debtor’s liquidation and repayment plan of the debtor. All the creditors also have a right to challenge the debtor’s right to a discharge.

The creditors are treated as per the priority of their claims In U.S. Bankruptcy law. The creditors are entitled to share in payment from the Bankruptcy estate. Additionally, the creditors are far more protected in case of secured claims as these claims are the ones where collateral (in the form of assets) secures the debt. The creditor, in secured claims, gets the authority to sell the assets or property in case the debtor defaults in payments.

Filing Bankruptcy is for those who are struggling with finances or are facing financial hardships. It also gives a debtor an option to either get the debts eliminated or pay them in portions over a period of time.

You must bear in mind that declaring Bankruptcy may affect your future pursuits or employment opportunities as more and more employers make sure that they check credit history on new job applicants or potential employees. When you file Bankruptcy, the information comes in the public domain and becomes a public record. The Bankruptcy details can also stay on the credit report associated with you for a period up to 7 to 10 years.

In a situation where the debt is dischargeable, then the question can be answered in the affirmative and filing Bankruptcy will enable a debtor to wipe away the ability of a creditor to collect the debt. Some debts, on the other hand, are non-dischargeable, such as child support obligations, student loans, death or injury awards while driving while intoxicated.

It is advisable that professional help be sought for questions like these which may become huge legal obstacles.

Yes, the code does not prohibit such an act unless he fulfills criteria of being appointed as Independent director on board of the debtor company.

Bankruptcy reaffirmation can be understood as a voluntary agreement. The agreement is made by a debtor with a creditor and is aimed at paying a debt that would otherwise be discharged in a Bankruptcy situation. This reaffirmation occurs generally in circumstances where a debtor is in possession of property or assets which the debtor does not want to be repossessed by a creditor.  An example would be a debtor agreeing to pay for an automobile because she needs it to get to her place of employment.

Here, the debtor presents himself as financially reliable and it is not always agreed specifically by a lender/ creditor.

Again, it is always advisable to seek help from legal counsel before taking any such step. Affirmation must only be filed when a debtor is sure of his ability to pay the debt.

The Bankruptcy litigation presents a way of litigation reinforcement arising in the context of Bankruptcy cases. This often arises in the case of business reorganizations. It is also important to know that not all litigation in a Bankruptcy case comes directly from the Bankruptcy itself. We must understand that any litigation can be potentially brought in the Bankruptcy court if the debtor is a part and especially if it concerns the debtor’s money or property.

The litigation may be between Debtor and Creditors on issues of discharge of debts, claims put up by the creditors or can also revolve around automatic stay or discharge injunction violations

The litigation may also be between Debtor and Trustee on issues on general discharge, exemptions and other issues related to property or assets.

There are following types of Bankruptcy:

Chapter 7 Bankruptcy is a type of Bankruptcy which is available for both individuals and businesses.  It is often referred to as liquidation.  In this kind of a proceeding, the court has to agree that a petitioner does not earn enough to be able to pay the debts. The assets are eventually sold off in this proceeding in order to pay the debt.

Chapter 11 Bankruptcy is also referred to as a reorganization. The main purpose of this proceeding is to restructure the financial obligations of a business in accordance with a priority schedule which gives the business a chance to survive, and allows its creditors to recover something in accordance with that financial plan.

Chapter 15 Bankruptcy is a type which is rarely heard by many. This kind is for the foreign debtors who seek help from the Bankruptcy courts in the US.

Chapter 9 Bankruptcy is another type of Bankruptcy for those towns and cities that owe a lot of money. By filing this type of Bankruptcy, they can proceed with the repayment as the process demands.

Chapter 13 Bankruptcy is also referred to as the repayment plan. Filing for this type of Bankruptcy helps a debtor in carrying on with the business or job while paying a certain amount assigned to him.

A Bankruptcy discharge means that the debtor has been released from personal liability for discharged debts.

Discharge from debts is helpful for the debtor as it prevents the creditors from taking action against the former. Most of the debts are dischargeable through Bankruptcy proceedings but not all types of debts are discharged. Once your debt is discharged, you can obtain a copy of the discharge.

Under certain circumstances, the Bankruptcy Code provides the Debtor’s discharge may be denied in a Chapter 7 case.

Discharge may be denied when the Debtor:

(1) failed to keep or produce adequate books or financial records,

(2) failed to satisfactorily explain any loss of assets,

(3) committed a Bankruptcy crime such as perjury,

(4) failed to obey a lawful order of the Bankruptcy court, or

(5) fraudulently transferred, concealed, or destroyed property that would have become property of the estate.