Chapter 7 Bankruptcy Laws & Code
The Chapter 7 bankruptcy laws were first enacted in the United States in 1841. The Bankruptcy Code of 1841 first established voluntary bankruptcy. The purpose of Chapter 7 bankruptcy even in 1841 was to allow for clients to obtain a fresh financial start. The Chapter 7 Bankruptcy Code was amended in 1898 and codified as the Bankruptcy Act of 1898.
When the Chapter 7 bankruptcy laws were codified in the Chapter 7 Bankruptcy Code of 1898, this began the era of the debtor and creditor relationship. The Chapter 7 bankruptcy laws were again amended in 1938 and this codification of the Chapter 7 Bankruptcy Code was known as the Bankruptcy Act of 1938. The Chapter 7 bankruptcy laws were also known as the Chandler Act. When the Chapter 7 Bankruptcy Code was changed in 1938 the purpose was to make bankruptcy more popular to debtors.
In 1978 the laws were amended again and the Chapter 7 Bankruptcy Code was codified into the Bankruptcy Reform Act of 1978. The Bankruptcy Reform Act of 1978 made many changes to the Chapter 7 bankruptcy laws. The change of the Chapter 7 Bankruptcy Code, for example, contained four chapters or titles of Chapter 7 bankruptcy laws.
The Chapter 7 Bankruptcy Code was again amended in 1984 and when the laws were amended in 1984 this was based upon Justice Brennan’s opinion in a bankruptcy case. The codification of the Chapter 7 Bankruptcy Code was known as The Bankruptcy Amendments and Federal Judgeship Act of 1984.
In 1994 the Chapter 7 bankruptcy laws were once again codified in The Bankruptcy Reform Act of 1994. This codification of the Chapter 7 Bankruptcy Code applied to all Chapter 7 bankruptcy cases filed on or after October 22, 1994.
The current Chapter 7 Bankruptcy Code can be found in Title 11 of the United States Code. The Chapter 7 Bankruptcy Code section deals specifically with Chapter 7 bankruptcy.
The Chapter 7 Bankruptcy Code was revised significantly and became effective in October of 2005. The 2005 revision to the Chapter 7 bankruptcy laws was known as the Bankruptcy Abuse Prevention and Consumer Protection Act. The Bankruptcy Abuse Prevention And Consumer Protection Act significantly amended the Chapter 7 bankruptcy laws.
Chapter 7 bankruptcy eligibility was significantly altered under the revision to the Chapter 7 bankruptcy laws of 2005. In fact, the Chapter 7 Bankruptcy Code imposed several changes, one of which was to require the attorney in a Chapter 7 bankruptcy to obtain from a Chapter 7 bankruptcy client, the client’s income for the six months preceding the filing of the Chapter 7 bankruptcy case. Under the current Chapter 7 bankruptcy laws, if a client’s income exceeds median income for the six months preceding the filing of a Chapter bankruptcy case, the client is ineligible to file for Chapter 7 bankruptcy.
Another change to the Chapter 7 bankruptcy laws was the requirement that a client complete a consumer credit counseling course in order to be eligible to file a Chapter 7 bankruptcy.
All of the current Chapter 7 bankruptcy laws are contained in the Chapter 7 Bankruptcy Code as outlined below:
Table of Contents