Most bankruptcy cases fall into one of three chapters—Chapter 7, Chapter 11, and Chapter 13. Bankruptcy cases are handled exclusively in Federal courts, meaning that petitioners are unable to file cases with their local state courts. Ultimately, the purpose of bankruptcy law is to help people and businesses that are unable to pay their creditors achieve a fresh financial start.
Bankruptcy laws dictate the liquidation of individual assets to pay for consumer debt as well as the creation of repayment plans. In bankruptcy cases involving troubled businesses, bankruptcy law helps ensure orderly distribution to creditors through liquidation or reorganization. The Bankruptcy Code App from Android provides a closer look at the Federal rules dictating bankruptcy procedure.