What does Bankruptcy Code mean?
Current federal statutes are compiled and codified in the Code of Laws of the United States of America (U.S.C.). Currently there are 52 Titles and two proposed titles. The Office of the Law Revision Counsel of the House of Representatives publishes the main edition of these laws every six years.
The bankruptcy code, which are the laws pertaining to the regulations and administration of bankruptcy filings in America, are contained in U.S. Code Title 11. Under this title there are separate Chapters which outline how all bankruptcy cases are handled in federal courts. For example, Chapter 1 of Title 11 outlines the general provisions of bankruptcy, Chapter 3 outlines general administration, and Chapter 7 outlines liquidation.
What types of bankruptcies are allowed under the U.S. Code Title 11?
Each different type of bankruptcy allowed is generally referred to by their Chapter in the United States Bankruptcy Code. For example, individuals may file Chapter 7 or Chapter 13 bankruptcy, with the details for each filing outlined in Chapter 7 (Liquidation) and Chapter 13 (Adjustment of debts of an individual with regular income).
Details about the other bankruptcies allowed are also codified in the U.S. Code, and information concerning these cases can be found in their corresponding chapters (e.g., Chapter 9, Chapter 11, Chapter 12, and Chapter 15).
Why was the bankruptcy code added to the current federal statutes?
Article 1, Section 8, Clause 4 of the United States of America permits bankruptcy filing. Adding the bankruptcy code to the U.S. Code created a detailed legal process for all United States citizens to follow, thus ensuring that all citizens would have their bankruptcy cases handled uniformly when they are creating a bankruptcy repayment plan or liquidating their assets to repay their debts.
Codifying bankruptcy laws, however, has not eliminated the right of Congress to draft amendments. For example, in 1978 Congress adopted the Bankruptcy Reform Act of 1978. States can also draft laws which can affect an individual’s or entity’s property rights. For example, state laws, not federal laws, may determine what property is protected from creditors or whether or not a lien is valid.
Talk to a bankruptcy lawyer if you have questions about the bankruptcy code or how your state laws work in conjunction with federal laws to determine your bankruptcy exemptions.