Because of the gloomy outlook that seems to prevail in today's economy, bankruptcy petitions are apparently becoming a common event. In fact, based on the official data made by various agencies and organizations, there are more than one million and four hundred thousand petitions for bankruptcy in 2009 alone. Latest records show that in the first quarter of 2010, already more than three hundred and seventy thousand petitions were filed. Fortunately, a bankruptcy petition is not the end of the line because there are options under the United States Bankruptcy Code, businesses or individuals can seek relief and the chance to rebuild their shattered finances.
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Most Americans file their bankruptcy petitions under Chapter 7 and 13 of the United States Bankruptcy Code. Under this law, the bankruptcy court will appoint a bankruptcy trustee to perform specific functions. More often than not, the designated trustees are lawyers who are not actually employees of the court, although they may receive compensation for the service they rendered as trustees. While their functions may be dependent on the specific orders of the court, these usually involve reviewing the documents submitted by the bankruptcy petitioner, preside over the meeting between the petitioner and the creditors in the case of a Chapter 7 petition, and administer nonexempt assets to pay the creditors.
Under Chapter 7, the petitioner is required to submit various documents that serve as his statement of assets and liabilities. It will then be the responsibility of the trustee to fully and meticulously review the veracity of the documents submitted. If there are any discrepancies in the documents submitted, the trustee can immediately conduct an investigation. Depending on the gravity of the results of the investigation that the trustee has conducted, a report will be submitted to the bankruptcy court outlining the discrepancies discovered and the results of the investigation.
A Chapter 7 petition also requires a regular meeting of creditors and petitioners, upon which the trustee will preside. Normally, the petitioner will be required to answer under oath the questions posed. In most instances, creditors seldom attend this meeting. Despite the absence of the creditors, however, the meeting will proceed with the trustee asking the petitioner about the truthfulness and accuracy of the documents submitted.
When an individual files a petition under Chapter 7 of the United States Bankruptcy Code, he may be allowed to retain specific assets. These are usually clearly defined by existing laws and are often referred to as exemptions. If the assets of the petitioner exceed the amount exempted under the law, the trustee has the power to administer over these nonexempt assets and to liquidate them to pay the creditors. Liquidation may be in the form of asking the petitioner to turn over bank deposits or selling these nonexempt assets through an auction.
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