Our bankruptcy specialists: Attorneys: Kerry Hettinger         Paralegals: Pam Cote Kathy R. Carimi       Kalamazoo: 324-2000 Battle Creek: 968-5000 Three Rivers: 278-7800 Sturgis: 659-6161 Coldwater: 278-6800 Dowagiac: 782-2500 Fax: 344-3601 Statewide: 800-294-5055

Most natural and artificial persons who reside in the United States, or whose domicile, place of business, or property is in the United States may file a voluntary petition under Chapter 7 of the Code. Certain persons, such as railroads, banks, and insurance companies, may not be debtors under Chapter 7. Persons who are qualified to file petitions under Chapter 7 may also seek relief under Chapter 11.

Only a family farmer with regular annual income may commence a Chapter 12 case. The Code defines the term family farmer to include individuals, corporations, and partnerships, if these persons or entities meet various tests set out in the Code.

Chapter 13 is restricted to individuals who earn enough regular income to make payments under a Chapter 13 plan and whose debts fall below certain ceilings. Only individuals with regular income who have, on the date of filing, matured and liquidated secured debts amounting to less than $750,000 and unsecured debts amounting to less than $250,000 may seek relief under Chapter 13.

Bankruptcy can be an overwhelming situation. The rules and regulations regarding bankruptcy are not simple, and for many, they cannot be handled alone. If you need any help with bankruptcy, or have any questions regarding your situation, feel free to contact us. Our bankruptcy specialists will be glad to assist you with a free consultation.

 Bankruptcy, an overview

Bankruptcy law provides for the development of a plan that allows a debtor, who is unable to pay his creditors, to resolve his debts, resolve his debts through the division of his assets among his creditors. This supervised division also allows the interests of all creditors to be treated with some measure of equality. Certain bankruptcy proceedings allow a debtor to stay in business and use revenue generated to resolve his or her debts. An additional purpose of bankruptcy law is to allow certain debtors to free themselves (to be discharged) of the financial obligations they have accumulated, after their assets are distributed, even if their debts have not been paid in full.

Bankruptcy law is federal statutory law contained in Title 11 of the United States Code. Congress passed the Bankruptcy Code under its Constitutional grant of authority to “establish...uniform laws on the subject of Bankruptcy throughout the United States.” See U.S. Constitution Article I, Section 8. States may not regulate bankruptcy though they may passed laws that govern other aspects of the debtor-creditor relationship. See Debtor-Creditor. A number of sections of Title 11 incorporate the debtor-creditor law of the individual states.

Bankruptcy proceedings are supervised by an litigated in the United States Bankruptcy Courts. These courts are a part of the District Courts of The United States. The United States Trustees were established by Congress to handle many of the supervisory and administrative duties of bankruptcy proceedings. Proceedings in bankruptcy courts are governed by the Bankruptcy Rules which were promulgated by the Supreme Court under the authority of Congress.

There are two basic types of Bankruptcy proceedings. A filing under Chapter 7 is called liquidation. It is the most common type of bankruptcy proceedings. Liquidation involves the appointment of a trustee who collects the non-exempt property of the debtor, sells it and distributes the proceeds to the creditors. Bankruptcy proceedings under Chapter 11, 12, and 13 involves the rehabilitation of the debtor to allow him or her to use further earnings to pay off creditors. Under Chapter 7, 12, 13 and some 11 proceedings, a trustee is appointed to supervise the assets of the debtor. A bankruptcy proceeding can either be entered into voluntarily by a debtor or initiated by creditors. After a bankruptcy proceeding is filed, creditors, for the most part, may not seek to collect their debts outside of the proceeding. The debtor is not allowed to transfer property that has been declared part of the estate subject to proceedings. Furthermore, certain pre-proceeding transfer of property, secured interests, and liens may be delayed or invalidated. Various provisions of the Bankruptcy Code also establish the priority of creditors’ interests.

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