Introduction to Bankruptcy Law Research Guide
This pathfinder is a guide to the Bankruptcy Law resources available at the Barclay Law Library. The focus is on basic primary law (codes and regulations), secondary sources and finding aids. For assistance with using this guide see a Reference Librarian at the reference desk.
Bankruptcy in the United States is allowed under Article 1, Section 8 of the U.S. Constitution. The Bankruptcy Code itself is located in title 11 of the U.S. Code. Broadly speaking, Chapters 1, 3 and 5 of the Bankruptcy Code apply to all types of bankruptcy. Chapters 7, 11 and 13 each relate specifically to the three most common types of bankruptcy.
Chapter 7 – Individual Debtor
Chapter 7 Bankruptcy is the most common form of bankruptcy. A Chapter 7 bankruptcy involves the straight sale (hereinafter liquidation) of the debtor’s nonexempt assets. A trustee is appointed to take over the debtor’s estate. Property is liquidated to pay off as much of the indebtedness as possible, while leaving the debtor with sufficient assets to carry on.
Chapter 11 – Reorganization
Under Chapter 11 bankruptcy reorganization, the debtor/business entity acts as its own trustee. The debtor will file a disclosure statement and a plan of reorganization with the Bankruptcy Court. This plan will detail a payment structure that will impair the rights of many or all of the debtor’s creditors. Creditors must then approve the filed plan of reorganization. This type of bankruptcy is used by financially struggling businesses to restructure their debts. It is also available to individuals. Individuals who consider Chapter 11 bankruptcy usually have debts in excess of the Chapter 13 bankruptcy limits or own substantial nonexempt assets, such as several pieces of real estate.
Chapter 13 – Individual Financial Reorganization
Chapter 13 bankruptcy involves reorganization for individual debtors. Debtors must have a regular income, with unsecured debts of less than $250,000 and secured debts of less than $750,000. A plan of repayment must be submitted within 15 days of filing the petition and it is not to exceed five years in duration.
See, United States Bankruptcy Courts, Bankruptcy Basics http://www.uscourts.gov/bankruptcycourts/bankruptcybasics.html