Did you know? People who failed to pay their debts back in the day were put in jail? While those days are fortunately long gone, the process of a bankruptcy has not necessarily gotten easier. It involves courts, judges, trustees, attorneys, and well, the creditors. This system is intended to help both the person in debt and the entity owed, and if done correctly, can dramatically impact the life of the individual filing for bankruptcy. An experienced attorney will be able to guide you, defend you, and fight for the best outcome possible, giving you a fresh start.

        Bankruptcy in the United States has a long history, beginning back in colonial times, when the colonies followed English common law. With the enactment of the Constitution, however, the founding fathers included in Article 1, section 8, a clause granting Congress the power to enact “uniform laws on the subject of Bankruptcies”. As such, legislation over time has governed how Bankruptcy is handled across the nation. The current system is based on the Bankruptcy Code of 1978, and while it has been amended, this legislation outlines how bankruptcy is to be conducted.

        Like in any other field of law, there are specifics rules and procedures to be followed when filing for bankruptcy. These rules cover many aspects such as timelines for actions to be taken, exemptions, income thresholds to determine your eligibility, as well as the different types of bankruptcies available, which we will discuss below. The rules governing bankruptcies are called Federal Rules of Bankruptcy Procedure. It is important to note, too, that each court and jurisdiction may have its own rules, and they also need to be followed.

        A bankruptcy begins when an individual decides he or she can no longer repay the debts owed to any creditors. The person in debt will then file what is called the “voluntary petition” with the corresponding court. The filing will be given a case number and a schedule will then be developed as to how the case will proceed. While there are bankruptcy judges, most processes are handled by an appointed trustee, or a delegate of the court with authority to conduct business. The trustee will be the center-point of the process. While not common, bankruptcy procedures can be started by the creditors. This is known as an involuntary filing, and it will be the subject of another blog.

        Once the petition is filed and accepted, the individual seeking relief is granted an “automatic stay”, which prevents any creditor from making any efforts to collect a debt, or garnish any wages from the individual.  

        During the process, a meeting will be scheduled between the debtor/attorney, creditors, and court trustee. This meeting is mandated by law, and states a person seeking bankruptcy relief must face the creditors to allow them to ask questions regarding the property and financial situation of the individual in debt. The meeting is commonly referred to as a “341 meeting”, stemming from the section in the bankruptcy code it is located.

        Overall, the bankruptcy process takes about 3-6 months. The outcome, depending on what chapter you filed, will most likely be a discharge or re-organization of your debt in a way that is manageable and allows you to carry on. In a bankruptcy case, your attorney will handle the completion of the petition, the filing of such, and the communications with the court or trustee as well as attend the creditor’s meeting with you. The attorney will also be able to advise which bankruptcy is better suited for your financial goals, and how you can make the most of this process to give you a better outlook. The attorney, like a bankruptcy lawyer Arlington TX trusts, will further defend your property against claims from creditors, and will be able to negotiate on your behalf to ensure creditors accept reasonable terms.


Thanks to our friends and contributors from Brandy Austin Law Firm PLLC for their insight into bankruptcy