A man who applied for personal Chapter 7 bankruptcy had the application contested by his creditors. The creditors said the man had considerable assets but was trying to clear his $4.5 million in debts. The creditors were arguing with the man’s assigned bankruptcy trustee that the man was hiding his assets in his ex-wife’s name. The Newark, New Jersey, man agreed to pay creditors some $2 million in a settlement of the bankruptcy case, so his bankruptcy could be cleared to discharge the remainder of his debts.
As part of the settlement, the man paid some $900,000 within 10 days of the agreement and paid some $800,000 within three months. The money was paid to the bankruptcy trustee and was distributed to his creditors.
The laws governing bankruptcy in the United States can be read in the United States Code Title 11. Individuals and businesses in the United States have constitutional rights to file for bankruptcy in Article 1, Section 8 of the U.S. Constitution. States do not have a right to change any bankruptcy laws in the United States. States do, however, have the ability to change the rules overseeing the relationships between creditors and debtors.
Under federal law, bankruptcy hearings are to be heard in U.S. Bankruptcy Courts which are part of the U.S. District Court system. While bankruptcy judges oversee the bankruptcy process, U.S. trustees are largely responsible for ruling on bankruptcy hearings.
Those who are filing for bankruptcy in the United States can file under one of four main chapters:
• Chapter 7
• Chapter 11
• Chapter 12
• Chapter 13
A bankruptcy filing under Chapter 7 is considered to be a complete liquidation of the debtor’s assets. The individual filing bankruptcy can decide to give up all of his belongings and cash to be distributed to those to whom he owes money in exchange for forgiving the remainder of the debts.
Bankruptcies that occur under Chapters 11, 12 and 13 involve allowing the debtors to pay off their debts to the creditors over a period of time until all debts are repaid.
A qualified Washington DC bankruptcy attorney can assist those who are filing for bankruptcy as individuals or businesses. Detailed paperwork is required when filing for bankruptcy. Those filing for such protection can typically benefit greatly by hiring an experienced Washington DC bankruptcy lawyer to represent them in all aspects of the bankruptcy process.