Bankruptcy is a voluntary or involuntary legal proceeding, where a person or company that can no longer pay his, her, its, or their debt(s) may get a fresh start by either selling assets to pay off the debt or create a repayment plan. (Title 11 U.S.C.)
Who are the Parties in a Bankruptcy?
A Bankruptcy has four (4) parties: Debtor(s), Creditor(s), U.S. Judge, and U.S. Trustee.
- Debtor: a person or company that owes the debt(s) (11 U.S.C. § 101(13))
- Creditor: a person or company that has a claim against the Debtor’s estate (the person or company that debtors owes money to) (11 U.S.C. § 101(10))
- U.S. Judge: an officer of the court appointed to approve or deny the Bankruptcy
- U.S. Trustee: an officer of the court appointed to oversee the Bankruptcy (11 U.S.C. § 102(9))
Steps in Bankruptcy Proceedings:
A Bankruptcy proceeding could be broken down into six (6) stages.
- Pre-Petition: Debtor enrolls and completes a Financial Education course.
- Petition: Debtor files a Bankruptcy Petition (a courtesy copy of a Voluntary Petition is shown below). Upon the filing of a Petition, a U.S. Federal Judge is assigned to the case and a U.S. Trustee is appointed (except for Chapter 11).
- 341a Hearing:Debtor appears in front of a U.S. Trustee to answer questions about the Debtor and the Bankruptcy Petition. Creditor(s) may be present at the hearing, and if present, may ask questions about Debtor’s financials.
- Confirmation: a U.S. Judge will confirm whether the Debtor will receive a discharge or approve the Chapter 13 repayment plan.
- Discharge: U.S. Judge grants a discharge.
- Post-discharge: Debtor must complete Debtor Education Course.
To learn more about Bankruptcy, please contact an attorney.