What is the Bankruptcy Code?

When faced with any life altering decision it is best to know as much information as possible about all of your options. The decision to file bankruptcy is no different. The encouraging part is that with the wealth of bankruptcy advice found on the internet and the help of a cheap bankruptcy lawyer, you can be well equipped with little trouble at all. When you begin your search into bankruptcy information don’t be afraid to ask the big questions first like “what is the bankruptcy code?”

Put simply, the “bankruptcy code” is the set of bankruptcy rules that outline everything there is to know about how bankruptcy works. But they haven’t been around forever. The “Bankruptcy Act of 1898″ was the first permanent federal bankruptcy legislation and it has changed quite a bit over the years. In fact, there have been several major amendments and reforms. The largest of all these changes was the “Bankruptcy Reform Act of 1978″ which replaced the law that had been in effect since the end of the nineteenth century. This reform act is what became known as the “bankruptcy code” and a version of it still exists today.

Since 1978 there have been 4 major changes to the “bankruptcy code.” The first was the “Bankruptcy Amendments and Federal Judgeship Act of 1984,” also known as BAFJA. This set of amendments dealt primarily with bankruptcy judges and whether or not their jurisdiction should be comprehensive. Two years later Congress passed another major bankruptcy bill called the “Bankruptcy Act of 1986.” It created Chapter 12 bankruptcy that was specifically designed for family farmers. That chapter of bankruptcy was temporary and no longer exists. In 1994 Congress passed the “Bankruptcy Reform Act of 1994″ which was the first time that a large number of amendments were made to the code all at once since its conception in 1978. Finally, in 2005 the latest overhaul to the bankruptcy code was passed, known as the “Bankruptcy Abuse and Consumer Protection Act” or BACPA. This amendment changed several key items in the bankruptcy code including the number of years between filing, and what can and cannot be included in a bankruptcy. The BACPA was created to prevent abuse to the bankruptcy process by making it a bit more difficult to qualify for bankruptcy.

Overall the bankruptcy code lays out the most important rules for all chapters of bankruptcy. Obviously the Chapter 7 bankruptcy rules will differ from Chapter 13 bankruptcy rules, but they are both necessary in order for things to run smoothly once the cases are filed. The bankruptcy code can even be used when you are faced with the Chapter 7 vs. Chapter 13 question that so many encounter. When looking for bankruptcy advice, utilize every resource you can. Many cheap bankruptcy lawyers offer free initial consultations so you can discuss your financial situation without feeling pressured to hire anyone. Filing bankruptcy is a huge decision, and feeling prepared with information will give you confidence throughout the process.

Comments are closed.