Bankruptcy in the United States

From ArticleWorld

Bankruptcy in the United States falls under federal jurisdiction. Although cases are filed in a United States federal bankruptcy court, the outcome depends greatly on state law.

History

The current Bankruptcy Code was enacted in 1978, and generally became effective on October 1, 1979. The current Code completely replaced the former Bankruptcy Act, sometimes called the Nelson Act, which initially entered into force in 1898. The current Code has been amended numerous times since 1978.

Chapters of bankruptcy code

Several types of proceedings fall under the category of bankruptcy.

• Chapter 7 – Liquidation – This is the most common form of bankruptcy.
• Chapter 9 – Reorganization for municipalities – Chapter 9 is only available to municipalities.
• Chapters 11, 12, and 13 – Reorganization – These are more complex situations that allow the debtor to keep some or all of their property.
• Chapter 15 – Cross-border insolvency – This chapter was added in 2005, and deals with foreign companies with U.S. debts.

Fraud

Bankruptcy crimes are prosecuted by the United States Attorney, typically after a reference from the United States Trustee, the case trustee, or a bankruptcy judge. Bankruptcy fraud can also sometimes lead to criminal prosecution in state courts, under the charge of theft of the goods or services,for which payment was evaded by the fraudulent bankruptcy filing. Bankruptcy fraud includes making a false or fraudulent representation, claim, or promise, in connection with a bankruptcy case. This can take place either before, or after, the commencement of the case. Knowingly concealing property of the estate from a custodian, trustee, marshal, or other court officer is a separate offense, and may also be punishable by a fine, or by up to five years in prison, or both.