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What Is the Bankruptcy Code?

The United States Constitution gives Congress the authority to create laws governing bankruptcy throughout all states in the United States.  In 1978, Congress passed the Bankruptcy Reform Act, which is contained in Title 11 of the United States Code and known today as the Bankruptcy Code.

The Bankruptcy Code has undergone various amendments, with the most current, sweeping changes made in 2005 under the Bankruptcy Abuse Prevention and Consumer Protection Act.  However, Title 11 encompasses nearly all relevant code for bankruptcy.  Other parts of the U.S. Code that relate to bankruptcy are Title 18, (bankruptcy crimes), Title 26 (bankruptcy tax issues), and Title 28, which creates and assigns jurisdiction to the bankruptcy courts.

Title 11 contains the following chapters:

  • Chapter 1—General Provisions. Chapter 1 contains definitions, rules of construction, applicability of chapters, power of court, who may be a debtor, and other general rules about bankruptcy.
  • Chapter 3—Case Administration. Chapter 3 outlines rules about commencing a case, officers, administration, and administrative powers.
  • Chapter5—Creditors, the Debtor, and the Estate. Chapter 5 lays the ground rules for creditors and claims, debtors’ duties and benefits, and the estate.
  • Chapter 7—Liquidation. Chapter 7 defines the rules for liquidation bankruptcy for individuals and businesses.
  • Chapter 9— Adjustment of Debts of a Municipality.  Chapter 9 provides for reorganization of municipalities that file bankruptcy.
  • Chapter 11—Reorganization. Chapter 11 establishes the rules for reorganization bankruptcy for businesses and individuals who qualify for Chapter 11 bankruptcy.
  • Chapter 12— Adjustment of Debts of a Family Farmer or Fishermen with Regular Annual Income. Chapter 12 establishes the rules for farmers and fisherman who file bankruptcy.
  • Chapter 13— Adjustment of Debts of an Individual with Regular Income. Chapter 13 establishes the rules for individuals filing bankruptcy, allowing them to work through a repayment plan.
  • Chapter 15— Ancillary and Other Cross-Border Cases. Chapter 15 defines the access that foreign representatives and creditors have to the bankruptcy court, cooperation with foreign courts, and recognition of foreign proceeding and relief.

Skilled and knowledgeable bankruptcy lawyers can help debtors understand how the Bankruptcy Code applies to their case.

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