State Bankruptcy Laws

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware

Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas

Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi

Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York

North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina

South Dakota Tennessee Texas Utah Vermont Virginia Washington Washington DC

West Virginia Wisconsin Wyoming

Federal Chapters
The United States federal government has created several different chapters of bankruptcy to fulfill the needs of the American people. Chapter Seven bankruptcy allows individuals to relieve their debts in severe cases. Chapter Nine bankruptcy is designed for municipality purposes. Chapter Eleven bankruptcy reorganizes accounts under the Bankruptcy Code. Chapter Twelve bankruptcy allows family-owned farms to relinquish debts as well as fisherman families. Chapter Thirteen is another form of individual bankruptcy for less severe necessities. And Chapter Fifteen bankruptcy is used for Cross-border and ancillary cases.

Basics
Bankruptcy is not for every individual or for every case. Whether or not an individual or business qualifies for bankruptcy depends on the amount of personal income and the amount of debt. In 2005 the federal government altered how bankruptcy in the United States is managed. President Bush approved the Bankruptcy Abuse Prevention and Consumer Protection Act in that year. Because of the heavy abuse to the bankruptcy system, this new act changed how the Bankruptcy Code functions.

In prior years those who did not have severe enough cases to apply for bankruptcy were being approved through the system. This left those in need of the bankruptcy system with less attention. The Bankruptcy Abuse Act now sets limits and new requirements for those who are able to qualify for Chapter Seven bankruptcy as well as set shorter deadlines for Chapter Thirteen cases.

Personal Bankruptcy
Chapter Seven bankruptcy is the most coveted form of bankruptcy in the nation. This chapter eliminates an individual's debts within a few months and does not require the individual to pay the debts out of his or her own pocket. Chapter Seven bankruptcy cases have assigned trustees who will evaluate an individual's property and will decide which property will be liquidated.

Each state has different holds on which kind of property can and cannot be liquidated. The property will be sold for what it is currently worth, not for what it was originally purchased. The liquidated property will then be used to pay off the outstanding debts, after the trustee takes his or her compensation percentage.

Chapter Thirteen bankruptcy is the other form of personal bankruptcy. Rather than liquidate property, individuals who qualify will have their income and debts evaluated. The court will then draw up and assign a personal repayment plan. This plan will allot how much the individual will need to pay each month, from his or her own personal income, to pay off his or her debts in a maximum of five years.

Discharge
Bankruptcy discharge relinquishes a debtor from liability for certain kinds of personal debts. After a discharge an individual is not legally required to pay these debts. As a permanent order, creditors may no longer submit collection actions, including phone calls and postal service. A discharge is assigned to those who have had a bankruptcy chapter approved.

When a discharge comes through depends on the specific kind of chapter. Some chapters may call for discharges within a few months, while others require repayment and a minimum of three or four years. Instructional courses must first be completed, in some chapters, and a trustee must first approve the discharge.