The bankruptcy process involves a set of federal laws designed to help individual and business debtors who cannot pay what they owe. All 94 federal judicial districts handle bankruptcies. Bankruptcy filings are done with the bankruptcy court in almost all of them. Federal bankruptcy courts have jurisdiction over bankruptcy cases, so they cannot be filed with a state court.
According to bankruptcy laws, filers who liquidate their assets to pay off their debts, or craft and carry out a repayment plan to pay back their creditors in a set period of time can have a fresh start. The Bankruptcy Act also protects businesses in trouble, providing them a means for orderly debt repayment through liquidation or reorganization. Either bankruptcy procedure is covered in the Bankruptcy Code, the three main chapters of which are Chapter 7, Chapter 11, and Chapter 13. The majority of bankruptcy petitions are filed under them.
The bankruptcy law is in place to achieve these purposes:
- To allow a bankrupt but honest debtor to start afresh by eliminating most of his or her debts.
- To make sure that debtors who have an available property for liquidation repay their creditors and do so in an organized manner.
Bankruptcy proceedings typically start with a debtor filing a petition for bankruptcy with a United States bankruptcy court. A bankruptcy filing may be done by an individual, by a married couple, or by a business or organization. Those who file for bankruptcy must also include statements enumerating their income, assets and liabilities, debts, and creditors. Filing for bankruptcy triggers the automatic stay, which stops all collection efforts from creditors, collection agencies, and other debt collectors. While the stay is in place, the debtor is covered with bankruptcy protection, and his or her creditors may not file or continue lawsuits, attempt wage garnishment, or even make a simple phone call to demand payment.
After the debtor has filed a bankruptcy petition, the clerk of court will send notice to the relevant creditors. In many Bankruptcy Chapter 7 cases, very little or no money is available from the bankruptcy estate to give to each creditor. For this reason, they have fewer incidents of dispute and the filer gets a bankruptcy discharge without objection. Once debts are discharged, the debtor is no longer liable for their payment.
When disputes over property ownership and worth, the amount of debt owed, et cetera are raised in a bankruptcy case, they may result in litigation. The bankruptcy court handles litigation in pretty much the same way the district court handles civil cases. This means a process that may include discovery, pre-trial proceedings, settlement efforts, and the actual trial.
Dealing with Bankruptcy Concerns? Contact an Oregon Bankruptcy Attorney Today!
Filing bankruptcy can be a confusing and overwhelming undertaking for a debtor in financial distress. It’s important to take every step carefully and make informed choices. Hiring a bankruptcy lawyer to advise and guide you throughout the experience is the smart move to make. If you’re considering bankruptcy, give us a call at Northwest Debt Relief Law Firm to schedule a consultation with one of our skilled and experienced Oregon bankruptcy attorneys.