Saturday, June 15, 2024
HomeBankBankruptcy In The Us

Bankruptcy In The Us

Protection Of The Public Interest

Bankruptcy Basics – Part 6: Bankruptcy Crime

In applying sections 1166, 1167, 1169, 1170, 1171, 1172, 1173, and 1174 of this title, the court and the trustee shall consider the public interest in addition to the interests of the debtor, creditors, and equity security holders.

Historical and Revision Notes

legislative statements

Section 1165 of the House amendment represents a modification of sections 1165 and 1167 of the Senate amendment requiring the court and the trustee to consider the broad, general public interest in addition to the interests of the debtor, creditors, and equity security holders in applying specific sections of the subchapter.

senate report no. 95989

Section 1165 requires the court, in consideration of the relief to be granted upon the filing of an involuntary petition, to take into account the “public interest” in the preservation of the debtor’s rail service. This is an important factor in railroad reorganization, which distinguishes them from other business reorganizations. Hence, this section modifies the provisions in sections 303 and 305 that govern generally when the business of a debtor may continue to operate, when relief under the Act sought should be granted, and when the petition should be dismissed.

Section 1167 imposes on the trustee the obligations, in addition to his other duties and responsibilities, to take into account the “public interest” in the preservation of the debtor’s rail service.

The Rising Cost Of Health And Bankruptcy Petitions

Multiple factors contribute to the rising cost of health care. Medical expenses and the increasing cost of prescription drugs have all affected the soaring medical debt among Americans. Lets look at some of the principal effects that medical debt has on bankruptcy stats.

1. At least 24% of survey respondents in the US are currently facing medical bankruptcy.

Medical bankruptcy, a way to solve the financial issue of not being able to repay your medical bills, is an American reality. A survey by the Kaiser Family Foundation found that 41% of American adults currently have some sort of debt from an unpaid medical or dental bill.

An analysis of government data shows that around 9% of adults in the US currently owe at least $250 in medical debt. And while medical bankruptcy is not a legal term, your obligations like dental or medical bills are dischargeable through a filing of bankruptcy, as long as the medical care you received happened prior to the filing.

2. Almost 30% of Black households have some sort of medical debt.

A report by the National Consumer Law Center has found that 27.9% of Black families have some sort of medical or dental debt. In comparison, among white families, only 17.2% have debt due to health care costs.

Medical debt disproportionately affects Black families and communities, as demonstrated by the COVID-19 pandemic and these medical bankruptcy statistics.

Expenses And Spin Are Equally High

There is no doubt that medical expenses, and therefore bills, are high. The KFF found that wage increases are not keeping up with rising health care costsmedical insurance premiums increased 54% while earnings have increased by only 26% since 2009.

Estimates have been different in the past due to the timing of the studies that were conducted, different methods, how the results were interpreted, and the reasons the results were being used.

Spin is a concept of using information in a manner that benefits the presenter, or parties associated with the presenter. The information presented in studies such as the ones cited can be manipulated in a way that makes the information, while not good, appear much worse.

With the right wording, it is possible to make these studies present information that can lead people to believe that nothing is wrong at all. For example, if you look at the data presented by The United States Courts, you’ll see that bankruptcy rates have dropped by 317,488 since 2006.

From this, you could infer that The Bankruptcy Abuse Prevention And Consumer Protection Act of 2005 has been effective. The Act may have been effective however, this statement does not take economic circumstances or the employment rates into consideration . With the right amount of spin, any information can be used in different ways.

You May Like: What Does A Trustee Do In A Bankruptcy Case

Canadian Bankruptcy Versus American Bankruptcy Information

To help you figure out if youre reading Canadian bankruptcy or American bankruptcy information, here are some of the most frequently used terms in the States:

Chapter 7 is the most common type of personal bankruptcy in the United States. Some businesses also file for Chapter 7. The name Chapter 7 does not apply to personal or business bankruptcies in Canada.

Chapter 11 is also part of the American bankruptcy system and the term Chapter 11 does not apply to bankruptcies in Canada. A Chapter 11 petition is usually used by businesses and corporations, however some individuals with high debt loads also file a Chapter 11 bankruptcy. Chapter 11 includes a restructuring process, giving a business or individual time to get their financial affairs back in order.

Chapter 13 is the American equivalent to a Canadian Consumer Proposal. In Canada, a Consumer Proposal is administered by a bankruptcy trustee and the process is governed by the Bankruptcy and Insolvency Act. It is, however, not the same as going bankrupt. In the States, a Chapter 13 petition is a form of bankruptcy, and the term Chapter 13 does not apply in Canada.

Relief That May Be Granted Upon Filing Petition For Recognition

A New York Bankruptcy Does NOT Stop A Foreclosure!

From the time of filing a petition for recognition until the court rules on the petition, the court may, at the request of the foreign representative, where relief is urgently needed to protect the assets of the debtor or the interests of the creditors, grant relief of a provisional nature, including

staying execution against the debtor’s assets

entrusting the administration or realization of all or part of the debtor’s assets located in the United States to the foreign representative or another person authorized by the court, including an examiner, in order to protect and preserve the value of assets that, by their nature or because of other circumstances, are perishable, susceptible to devaluation or otherwise in jeopardy and

any relief referred to in paragraph , , or of section 1521.

Unless extended under section 1521, the relief granted under this section terminates when the petition for recognition is granted.

It is a ground for denial of relief under this section that such relief would interfere with the administration of a foreign main proceeding.

The court may not enjoin a police or regulatory act of a governmental unit, including a criminal action or proceeding, under this section.

The standards, procedures, and limitations applicable to an injunction shall apply to relief under this section.

2010Subsec. . Pub. L. 111327 substituted “362” for “362”.

Statutory Notes and Related Subsidiaries

Effective Date

Also Check: What Does Debt Mean

Applicability Of Other Sections Of This Title

Sections 301, 333, 344, 347, 349, 350 351,,1 361, 362, 364, 364, 364, 364, 365, 366, 501, 502, 503, 504, 506, 507, 509, 510, 524, 524, 544, 545, 546, 547, 548, 549, 549, 549, 550, 551, 552, 553, 555, 556, 557, 559, 560, 561, 562, 1102, 1103, 1109, 1111, 1122, 1123, 1123, 1123, 1123, 1123, 1123, 1123, 1124, 1125, 1126, 1126, 1126, 1126, 1126, 1126, 1127, 1128, 1129, 1129, 1129, 1129, 1129, 1129, 1129, 1129, 1142, 1143, 1144, and 1145 of this title apply in a case under this chapter.

A term used in a section of this title made applicable in a case under this chapter by subsection of this section or section 103 2 of this title has the meaning defined for such term for the purpose of such applicable section, unless such term is otherwise defined in section 902 of this title.

A section made applicable in a case under this chapter by subsection of this section that is operative if the business of the debtor is authorized to be operated is operative in a case under this chapter.

Historical and Revision Notes

legislative statements

house report no. 95595

Section 901 makes applicable appropriate provisions of other chapters of proposed title 11. The general rule set out in section 103 is that only the provisions of chapters 1 and 9 apply in a chapter 9 case. Section 901 is the exception, and specifies other provisions that do apply. They are as follows:

§347. Unclaimed property. This provision currently appears in section 96 of chapter IX .

Editorial Notes

References in Text

Filing Of Proofs Of Claims Or Interests

A creditor or an indenture trustee may file a proof of claim. An equity security holder may file a proof of interest.

If a creditor does not timely file a proof of such creditor’s claim, an entity that is liable to such creditor with the debtor, or that has secured such creditor, may file a proof of such claim.

If a creditor does not timely file a proof of such creditor’s claim, the debtor or the trustee may file a proof of such claim.

A claim of a kind specified in section 502, 502, 502, 502 or 502 of this title may be filed under subsection , , or of this section the same as if such claim were a claim against the debtor and had arisen before the date of the filing of the petition.

A claim arising from the liability of a debtor for fuel use tax assessed consistent with the requirements of section 31705 of title 49 may be filed by the base jurisdiction designated pursuant to the International Fuel Tax Agreement and, if so filed, shall be allowed as a single claim.

Historical and Revision Notes

legislative statements

The House amendment adopts section 501 of the Senate amendment leaving the Rules of Bankruptcy Procedure free to determine where a proof of claim must be filed.

Section 501 expands language contained in section 501 of the House bill and Senate amendment to permit the debtor to file a proof of claim if a creditor does not timely file a proof of the creditor’s claim in a case under title 11.

senate report no. 95989

Editorial Notes

Amendments

Recommended Reading: How Does Bankruptcy Affect Car Insurance

How Long Does Medical Debt Stay On Your Credit Report

Medical debt will remain on your as long as it is accurate, and the account is open. Once the account closes, you can expect negative information to fall off your credit report within seven years. If you claim bankruptcy, that can remain on your credit report for 10 years.

However, the rules are set to change. On July 1, 2022, medical debt in collections will be removed from your credit report once you pay it. In 2023, the major credit bureaus will stop reporting medical debt of less than $500.

Origins Of American Bankruptcy Law

Bankruptcy Basics – Part 1: Introduction

Like much of American law, the origins of both state laws for the collection of debt and federal bankruptcy law can be found in England. State laws are, in general, derived from common law procedures for the collection of debt. Under the common law a variety of procedures evolved to aid a creditor in collecting a debt. Generally, the creditor can obtain a judgment from a court for the amount that he is owed and then have a legal official seize some of the debtors property or wages to satisfy this judgement. In the past a defaulting debtor could also be placed in prison to coerce repayment. Bankruptcy law does not replace other collection laws but does supercede them. Creditors still use procedures such as garnishing a debtors wages, but if the debtor or another creditor files for bankruptcy such collection efforts are stopped.

You May Like: How Does A Bankruptcy Affect Credit

Effects Of Recognition Of A Foreign Main Proceeding

Upon recognition of a foreign proceeding that is a foreign main proceeding

sections 361 and 362 apply with respect to the debtor and the property of the debtor that is within the territorial jurisdiction of the United States

sections 363, 549, and 552 apply to a transfer of an interest of the debtor in property that is within the territorial jurisdiction of the United States to the same extent that the sections would apply to property of an estate

unless the court orders otherwise, the foreign representative may operate the debtor’s business and may exercise the rights and powers of a trustee under and to the extent provided by sections 363 and 552 and

section 552 applies to property of the debtor that is within the territorial jurisdiction of the United States.

Subsection does not affect the right to commence an individual action or proceeding in a foreign country to the extent necessary to preserve a claim against the debtor.

Subsection does not affect the right of a foreign representative or an entity to file a petition commencing a case under this title or the right of any party to file claims or take other proper actions in such a case.

Statutory Notes and Related Subsidiaries

Effective Date

Nonprofit Budget And Credit Counseling Agencies Financial Management Instructional Courses

The clerk shall maintain a publicly available list of

nonprofit budget and credit counseling agencies that provide 1 or more services described in section 109 currently approved by the United States trustee and

instructional courses concerning personal financial management currently approved by the United States trustee , as applicable.

The United States trustee shall only approve a nonprofit budget and credit counseling agency or an instructional course concerning personal financial management as follows:

The United States trustee shall have thoroughly reviewed the qualifications of the nonprofit budget and credit counseling agency or of the provider of the instructional course under the standards set forth in this section, and the services or instructional courses that will be offered by such agency or such provider, and may require such agency or such provider that has sought approval to provide information with respect to such review.

The United States trustee shall have determined that such agency or such instructional course fully satisfies the applicable standards set forth in this section.

If a nonprofit budget and credit counseling agency or instructional course did not appear on the approved list for the district under subsection immediately before approval under this section, approval under this subsection of such agency or such instructional course shall be for a probationary period not to exceed 6 months.

can satisfy such standards in the future.

Amendments

You May Like: When Was My Bankruptcy Discharged

Do You Get Out Of All Your Debts If You File For Bankruptcy

Bankruptcy can renegotiate or erase many types of unsecured debts, such as on credit cards or personal loans. Other debts cannot be discharged in a bankruptcy, including:

The U.S. Bankruptcy Code lists 19 different categories of debts that cannot be discharged in:

  • Alimony and child support
  • Certain unpaid taxes, such as tax liens. However, some federal, state, and local taxes may be eligible for discharge if they date back several years
  • Debts for willful and malicious injury to another person or property
  • Debts for death or personal injury caused by the debtorâs operation of a motor vehicle while intoxicated from alcohol or impaired by other substances
  • Debts that you failed to list in your bankruptcy filing
  • Common/maintenance fees for condo association

Executory Contracts And Unexpired Leases

Chart: Most Bankruptcies Since Great Recession

Except as provided in sections 765 and 766 of this title and in subsections , , and of this section, the trustee, subject to the court’s approval, may assume or reject any executory contract or unexpired lease of the debtor.

If there has been a default in an executory contract or unexpired lease of the debtor, the trustee may not assume such contract or lease unless, at the time of assumption of such contract or lease, the trustee

cures, or provides adequate assurance that the trustee will promptly cure, such default other than a default that is a breach of a provision relating to the satisfaction of any provision relating to a default arising from any failure to perform nonmonetary obligations under an unexpired lease of real property, if it is impossible for the trustee to cure such default by performing nonmonetary acts at and after the time of assumption, except that if such default arises from a failure to operate in accordance with a nonresidential real property lease, then such default shall be cured by performance at and after the time of assumption in accordance with such lease, and pecuniary losses resulting from such default shall be compensated in accordance with the provisions of this paragraph

compensates, or provides adequate assurance that the trustee will promptly compensate, a party other than the debtor to such contract or lease, for any actual pecuniary loss to such party resulting from such default and

the commencement of a case under this title

Recommended Reading: How To Look Up Old Bankruptcies

Bankruptcy Rates By State

California takes the lead in bankruptcy filings for 2021

Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas’ experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.

Many people are likely unaware of how many entities declare bankruptcy each year. By the end of 2021, 401,293 Americans had filed for bankruptcy. As of March 2022, over 89,000 have filed. However, the United States isn’t a monolith, and regions can be subject to vastly different financial circumstances than their neighbors.

These factors can impact how much credit the average resident or business may need to take on, in addition to potentially making it difficult for them to keep up with their payments. Through looking at bankruptcy rates by state, we can get a better sense of where individuals and companies areand are notstruggling with debt.

Closing And Reopening Cases

After an estate is fully administered and the court has discharged the trustee, the court shall close the case.

A case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause.

Historical and Revision Notes

senate report no. 95989

Subsection requires the court to close a bankruptcy case after the estate is fully administered and the trustee discharged. The Rules of Bankruptcy Procedure will provide the procedure for case closing. Subsection permits reopening of the case to administer assets, to accord relief to the debtor, or for other cause. Though the court may permit reopening of a case so that the trustee may exercise an avoiding power, laches may constitute a bar to an action that has been delayed too long. The case may be reopened in the court in which it was closed. The rules will prescribe the procedure by which a case is reopened and how it will be conducted after reopening.

Editorial Notes

1984Subsec. . Pub. L. 98353 substituted “A” for “a”.

Statutory Notes and Related Subsidiaries

Effective Date of 1984 Amendment

Amendment by Pub. L. 98353 effective with respect to cases filed 90 days after July 10, 1984, see section 552 of Pub. L. 98353, set out as a note under section 101 of this title.

Also Check: Illinois Northern District Bankruptcy

RELATED ARTICLES

Popular Articles