Bankruptcy is not a single thing. It’s a set of different legal options for people and businesses to deal with their debts.
It’s in the U.S. Constitution
The U.S. Constitution specifically authorizes bankruptcy. It gives Congress the “Power . . . To establish . . . uniform Laws on the subject of Bankruptcies throughout the United States.” (See Article 1, Section 8, clause 4.)
This means that bankruptcy cases are governed by federal law. That law is contained in the Bankruptcy Code (which is Title 11 of the United States Code).
However, state laws also have a direct effect on bankruptcies because of our federal system of government. State laws effect bankruptcy cases in many ways but especially in determining what property exemptions you can use to protect your assets from creditors.
Bankruptcy Options
Bankruptcy provides legal options to you in two broad ways.
First, there are different “Chapters” of bankruptcy to choose among to fit your situation. Chapter 7 and 13, and sometimes Chapter 11, are the ones most often used by consumers or small business owners. Businesses generally use either Chapter 7 and 11. Chapter 12 is for ranchers, farmers, and fishermen. (My next blog post will cover these Chapters in more detail.)
And second, within each Chapter there are usually a bunch of options for you. For example, there are options about how you deal with homes with mortgages and vehicles on vehicle loans, and with special creditors such as the IRS or an ex-spouse.
A Flexible Tool
If you are in financial distress there is usually a bankruptcy solution appropriate for your financial and personal circumstances.
Bankruptcy has its benefits and costs. For some people it’s not the wisest or best solution. It’s a serious choice that needs to be carefully weighed.
Because this is a decision with major consequences whichever direction you go, it should definitely be made with the help of a lawyer who specializes in bankruptcy. There is simply no substitute for the experience of a professional who spends day in and day out of his or her working life constantly applying the bankruptcy laws and all the other related areas of law—real estate, personal property, debt collection, divorce, tax, business –to people’s real situations.
Conclusion
Bankruptcy is an option that the Constitution and our laws provide for in appropriate circumstances. Although it should neither be entered into lightly, it also should not be avoided out of unnecessary fear.
If you are in the Dallas-Fort WorthMetroplex, I can help you understand your possible bankruptcy options. I’m Carrie Weir, an experienced Texas bankruptcy lawyer, serving people and small businesses in and around Rockwall, Heath, Greenville, Lavon, Wylie, Mesquite, Royse City, Sachse, and Rowlett. Please call for a free and confidential consultation at 972-772-3083. Or if more convenient, use the contact form here. Thank you.
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