Bankruptcy Code – Understanding The Law

Bankruptcy code is the part of the bankruptcy laws in the United States. It is true that bankruptcy is a situation that is forced on persons with deep financial problems, but it is also true that the bankruptcy code has been included in the bankruptcy laws in order to protect such people from getting into further problems. This article intends to provide you valuable information regarding the various bankruptcy codes.

Types Of Bankruptcy Laws Taken From The Bankruptcy Code

As per the bankruptcy code, at present, there are four main types of bankruptcy laws. These bankruptcy laws are popularly known as chapters. The four main chapters in the bankruptcy code include chapter 7 bankruptcy, chapter 11 bankruptcy, chapter 12 bankruptcy an chapter 13 bankruptcy.

How Does The Bankruptcy Code Help Persons In Deep Debt Troubles

The various bankruptcy laws in the bankruptcy code have been designed in a way to protect people with bad financial position and deep debt troubles from unreasonable hassles that might be forced by the creditors. For example, when a debtor files for any type of bankruptcy, a bankruptcy stay is imposed by the bankruptcy court. This bankruptcy stay protects the debtor from the undue activities from the creditors. For example, the creditors cannot force the debtor to make the payment while the proceedings for the bankruptcy are running in the court. Any such activity from the creditors will be treated as illegal and the debtor can take action against them. However, the purpose of the bankruptcy code is not to protect only the debtors. The bankruptcy code has been carefully designed in order to stop debtors from doing any kind of bankruptcy fraud. New bankruptcy laws are added to the bankruptcy code from time to time in order to fill the loopholes that might be used by the debtors to perform some kind of bankruptcy frauds.

Is The Bankruptcy Code Same In All The States?

The bankruptcy code varies from state to state. Therefore, it is important for a debtor to make sure that the bankruptcy attorney they are hiring is completely aware of the specific bankruptcy code of the state. However, it does not mean that the states have the power to change the bankruptcy code. The basic bankruptcy rules are the same in all the states. What makes the real difference is the way the various bankruptcy laws are interpreted in every state.

If there is a change in the bankruptcy code, the change will come into effect in all the states.