Do you know someone who is under siege by creditors, has stopped answering the phone to avoid calls from collection agents, or lies awake at night wondering how to stop the financial bleeding? If so, let your friend know there is a way out. Bankruptcy can provide massive financial relief.
Most people under financial duress feel overwhelmed by stress. We’ve seen it over and over in our practice. People who finally decide to seek legal help arrive anxious about their situation and unsure whether they can get out from under their debt. They often feel guilty for having amassed so much debt that they put off asking for help. Some didn’t know whom to ask; others didn’t believe they had the right to ask for help.
A strong tool in the legal arsenal, the bankruptcy law gives people the right to ask for help getting back on their feet.
About the Bankruptcy Court
By the 1960s, the rise in consumer bankruptcy and congestion in the federal courts led to proposals for reform of the nation’s bankruptcy laws. As part of a broad plan to revise the bankruptcy code, the congressionally chartered Commission on Bankruptcy Laws of the United States recommended the establishment of independent bankruptcy courts within the federal judiciary. The Bankruptcy Reform Act of 1978 (92 Stat. 2657) conferred original bankruptcy jurisdiction on the district courts and established a bankruptcy court in each judicial district to exercise bankruptcy jurisdiction. The act provided that the new bankruptcy courts would be considered adjuncts of the district courts, but would be presided over by bankruptcy judges appointed by the president and confirmed by the Senate for fourteen-year terms, beginning in 1984. In the meantime, the incumbent referees would serve as bankruptcy judges. Additional challenges to the bankruptcy law in 1984 changed bankruptcy jurisdiction. Under current practice, district courts automatically refer bankruptcy cases and proceedings to the bankruptcy court. A bankruptcy court is authorized to decide all referred business, except in limited matters known as “non-core” proceedings. If one of the parties does not consent to entry of a judgment by the bankruptcy judge in these proceedings, the bankruptcy court may only hear the matter and submit proposed findings of fact and conclusions of law to the district court. The district judge then enters the final order, which is subject to review by the courts of appeals or bankruptcy appellate panels.
The Attorney’s Role
An attorney evaluates and helps determine a client’s qualifications for bankruptcy. The attorney also files the bankruptcy petition to the court trustee for consideration. (Individuals may represent themselves in bankruptcy court as well). Once the bankruptcy petition is filed, the court-appointed bankruptcy trustee evaluates the case and considers the needs and rights of creditors in each case, as well as the qualifications and means of the debtor before submitting the case for adjudication.
A court-approved bankruptcy judgment may discharge massive debt under a Chapter 7 filing, or establish a feasible repayment plan under a Chapter 13 bankruptcy for some or all of the debt. Other bankruptcy chapters address the financial needs of specific entities, such as businesses, farms and municipalities. A variety of remedies may apply. However, not all debts are dischargeable under bankruptcy: college loans, child support payments, criminal restitution demands and divorce judgments may not be discharged through bankruptcy.
At Daley Law we recommend that people and companies suffering severe financial stress consult an experienced attorney who can help explore legal options and recommend the appropriate course of action. Seeking the advice of a qualified lawyer is strongly recommended because bankruptcy has long-term financial and legal consequences. If you need help finding a bankruptcy attorney to assist you, visit NACBA.org