How Bankruptcy Laws Work

Even though most people don't consider themselves at a financial risk for bankruptcy, the sad statistics are that today more and more people are heading that direction. In fact, the various forms of bankruptcy such as chapter 7, chapter 13, and even chapter 11 are becoming a more popular financial out for people and businesses each and every day.

The U.S. bankruptcy laws were put in place by Congress in order to provide uniformity to the code and statutes throughout the United States. The bankruptcy laws were actually put in place to protect people from doing further financial harm.

Within the bankruptcy chapters there are four sections or chapters that lay out the various rules, regulations, and qualifications of each type of chapter or statutes. You are probably familiar with the term Chapter 13 bankruptcy or Chapter 7 bankruptcy. These numbers simply refer to the section of the bankruptcy code that addresses the particular circumstance.

With these various chapters of bankruptcy, are explanations of how the various laws are set up to deal with the filing procedures and how the debt is relieved or negotiated down. There are also provisions regulating the behavior of the creditors themselves as it pertains to contacting and collection attempts by the creditor.

The individual states can have and pass their own statutes concerning bankruptcy laws or codes. However, any statue that a state may be considering for law must still work within the framework of the Federal bankruptcy codes.

Even though the individual states can't alter the basic intent of the federal bankruptcy laws, the do have the right to interpret how the claims should be filed and how they are acted upon by the individual states themselves.

Just like most any statute, the bankruptcy codes are dynamic and subject to change. This is why it is imperative that an individual seeks the counsel of a professional bankruptcy attorney.

Any type of change to the top level of the bankruptcy codes and statutes will have to come from the United States Congress. On such change has come down the pike as it pertains to the filing of a Chapter 7 bankruptcy. The change to the core statute to this chapter had to do with the burden of proof. Essentially, it added additional criteria (or burden of proof)upon the person filing in order for them to meet the criteria necessary to have the right to file for bankruptcy.

With this change, the person seeking relief from the bankruptcy courts will only be approved for filing once they have completed a court approved financial and bankruptcy session. With the ever growing number of people seeking relief from debt via the bankruptcy system, this amendment was added to help ensure that the person filing was truly in a financial dead end and not someone who had just incurred a great deal of debt with no intention of paying it off.

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