Bankruptcy Cases
Bankruptcy
law provides for the development of a plan that allows a debtor,
who is unable to pay his creditors, to resolve his debts through
the division of his assets among his creditors. This supervised
division also allows the interests of all creditors to be
treated with some measure of equality. Certain
bankruptcy proceedings allow a
debtor to stay in business and use revenue generated to resolve
his or her debts. An additional purpose of
bankruptcy law is to allow
certain debtors to free themselves (to be discharged) of the
financial obligations they have accumulated, after their assets
are distributed, even if their debts have not been paid in full.
Bankruptcy
proceedings are supervised by and litigated in the United States
Bankruptcy Courts. These courts
are a part of the District Courts of The United States. The
United States Trustees were established by Congress to handle
many of the supervisory and administrative duties of
bankruptcy proceedings.
Proceedings in bankruptcy courts
are governed by the Bankruptcy
Rules which were promulgated by the Supreme Court under the
authority of Congress.
There are two basic types of
Bankruptcy proceedings. A filing
under Chapter 7 is called liquidation. It is the most common
type of bankruptcy proceeding.
Liquidation involves the appointment of a trustee who collects
the non-exempt property of the debtor, sells it and distributes
the proceeds to the creditors.
Bankruptcy proceedings under Chapters 11, 12, and 13
involves the rehabilitation of the debtor to allow him or her to
use future earnings to pay off creditors. Under Chapter 7, 12,
13, and some 11 proceedings, a trustee is appointed to supervise
the assets of the debtor. A bankruptcy
proceeding can either be entered into voluntarily by a debtor or
initiated by creditors. After a
bankruptcy proceeding is filed, creditors, for the most
part, may not seek to collect their debts outside of the
proceeding. The debtor is not allowed to transfer property that
has been declared part of the estate subject to proceedings.
Furthermore, certain pre-proceeding transfers of property,
secured interests, and liens may be delayed or invalidated.
Various provisions of the Bankruptcy
Code also establish the priority of creditors' interests.
If you or a loved one is in need of legal
advice concerning bankruptcy issues, contact the Houston Legal
Team for immediate assistance by calling 713-301-0303 or
submit your case online.
