Bankruptcy Court

Bankruptcy is a Federal issue and as such bankruptcy court proceedings are not held in state court but in one of 94 Federal Judicial Districts.

The objective of a bankruptcy court is to give an honest debtor a "fresh start" by relieving them of the majority of their debt, and to effectively repay creditors an amount that the debtor has available for payment.

New Federal Bankruptcy Law
The new bankruptcy law will affect all people filing for bankruptcy. In addition to increased fees, the new federal bankruptcy law requires that individuals who file for bankruptcy must first go through credit counseling. It is felt that credit counseling will protect individuals from filing for bankruptcy unnecessarily.

Congress established the United States Trustees to further supervise and administrate bankruptcy proceedings.



United States Trustee Program
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which opens a new era in the history of bankruptcy law and practice, was passed by Congress and signed into law by President Bush on April 20, 2005.

The United States Trustee Program is the component of the Department of Justice that protects the integrity of the nation's bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.

The Act gives the U.S. Trustee Program new responsibilities in a number of areas, including:

Implementing the new “means test” to determine whether a debtor is eligible for chapter 7 (liquidation) or must file under chapter 13 (wage-earner repayment plan).
Supervising random audits and targeted audits to determine whether a chapter 7 debtor's bankruptcy documents are accurate;
Certifying entities to provide the credit counseling that an individual must receive before filing bankruptcy
Certifying entities to provide the financial education that an individual must receive before discharging debts; and
Conducting enhanced oversight in small business chapter 11 reorganization cases.
In addition to the above summary, there are 25 new changes to the Personal Bankruptcy Law.



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