Put in simple words, bankruptcy law is what allows you, as a creditor to be able to solve your financial problems. It creates a forum where you can develop a repayment plan and stick to it. In some cases your assets will need to be divided and given to creditors. This is often done under a court-appointed trustee who will oversee the entire process. There are several categories under which you can file for bankruptcy. Some of them allow you to continue in your line of work to generate the funds to repay your debts.

Bankruptcy laws also provide for the ability to get discharges where are creditor can free himself of accumulated debt. Once provided by the court a creditor will not be required to pay all of his debts in full.

Bankruptcy law comes under the purview of Federal Law and comes under Title 11 of the United States Code. While the overall law has to be adhered to, each state can be laws that further guide the creditor-debtor in the process of claims. All proceedings in relation to bankruptcy claims are dealt with in the United States Bankruptcy Courts. Bankruptcy proceedings are of two kinds. The most commonly opted for is under Chapter 7 which calls for liquidation. A trustee is appointed to supervise the division of assets to creditors. Bankruptcy can also be filed for under Chapters 11, 12, and 13. These proceedings can be voluntary or can be initiated by the creditors. What these Chapters provide for is a means to allow the debtor to work off his debt.

Once bankruptcy is filed for, creditors will have to wait to claim their dues within the boundaries of the ongoing proceedings. The debtor cannot move any asset that is a part of the proceeding. Any such transfers that had been initiated before the proceedings will be cancelled or invalidated. The Bankruptcy code has several provisions that allow creditors to build priorities. Recent rulings however have held that Individual Retirement accounts cannot be used for withdrawal in bankruptcy cases. This gives some measure of protection to debtors who are already in serious financial trouble.

There have been several revisions of guidelines with regards to dismissals and conversions in relation to proceedings in each of the chapters. The role of the trustees too has been expanded to include more supervisory responsibilities.