Bankruptcy is a set of Federal laws and rules that can help individuals and businesses who owe more money than they can pay.
The laws governing bankruptcy can be found in the U.S. Bankruptcy Code (Title 11 of the United States Code) and in the Federal Rules of Bankruptcy Procedure.
Bankruptcy is filed in a court that is dedicated to Bankruptcy proceedings. In San Diego, this is the US Bankruptcy Court, Southern District of California
Here is a great description of the nature of bankruptcy and the relief it may provide.
There are several different ways to file for bankruptcy, and if you decide that bankruptcy is a good remedy for you, you'll want to decide which type is the right one for you.
Some types liquidate the debtor's property in exchange for a discharge order so the debtor no longer owes the debt, and some reorganize the debt so the debtor can resolve the debt over time:
Chapter 7. Known as the "liquidation chapter," Chapter 7 is a process through which the debtor's non-exempt property is sold for cash by a trustee and the proceeds are distributed to creditors.
Chapter 11. Known as the "reorganization chapter," Chapter 11 allows corporations, partnerships and some individuals to avoid liquidating their assets by presenting a plan for approval by the creditors and the court.
Chapter 13. Chapter 13 is designed for an individual with regular income and who believes their debts can be paid back over time. The individual presents a plan for a percentage of their future income to be paid to the bankruptcy court trustee for distribution to the creditors.
There are others that are used more infrequently, such as Chapter 12, which applies to family farmers. For more information about the different types of Bankruptcy, see the U.S. Courts Bankruptcy Basics Manual.
In this guide we focus on Chapter 7 and Chapter 13, and provide additional references to the other forms of bankruptcy.
IT IS VERY IMPORTANT THAT YOU CHOOSE THE CORRECT CHAPTER UNDER WHICH TO FILE. So take some time to acquaint yourself with the various types. This guide provides a good start, and will lead you to more resources to complete your research.
You may also choose to have an attorney file bankruptcy for you. For assistance with finding a bankruptcy attorney, see "What if I need an attorney" on our Resources page.
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When doing reseach regarding bankrupcy law, you will come across terms that may be unfamiliar to you, such as "debtor," "creditor," and "trustee." You can find a helpful glossary of bankruptcy terms from the United States Courts here.