The US Constitution authorizes Congress to enact uniform laws regarding bankruptcy. Congress created the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure. The Code and Rules set forth the formal procedures and legal processes for individuals and entities experiencing debt.
There is a bankruptcy court for each judicial district in the United States. A bankruptcy judge can also handle non-bankruptcy matters. These are generally issues that could be brought forth in a district court or state court, but are directly related to the bankruptcy matter at hand.
Although there are actual bankruptcy judges, generally the only courthouse appearance will be held in front of a trustee. A trustee is a government appointed bankruptcy attorney, not a judge. These appearances are called 341 meetings. The trustee asks the debtor questions about their bankruptcy petition and schedules to make sure all relevant information was disclosed and verification may be completed.
In a chapter 13 bankruptcy, from the date of filing, creditors have a 70 day period to put forth a claim in the debtors’ case. Once that day has passed, further claims are barred and will not be included in the repayment plan. A chapter 13 bankruptcy will range 3-5 years and once completed, the remaining debt is discharged the creditors cannot try to collect the remaining debt.
In a chapter 7 bankruptcy, the timeline is roughly a 90-day period from filing to discharge. Creditors will still file claims in a chapter 7, but the debtor is not required to pay it back. Once the debtor has received their discharge from the trustee, the debt is wiped from their record and the creditors cannot collect it.
Whether a debtor files a chapter 7 or chapter 13 bankruptcy (or any other kind of bankruptcy), the goal of the bankruptcy is to afford people the opportunity for a fresh start.
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