Bankruptcy laws are federal laws and are the same in every state, although some interpretations of the laws are regional.  These laws are found in title 11 of the U.S. Code.  The bankruptcy laws are divided into chapters. There are two chapters relevant to consumer cases:

Chapter 7 – “straight bankruptcy” – the person owing money (called the “Debtor”) submits information to show all assets and all liabilities; a Trustee is appointed to determine if the Debtor has any assets which can be taken and sold.  If no assets are available (as in most of the cases we file under this Chapter), and no bad acts have been committed by the Debtor, most debts are forgiven (a few exceptions are discussed below); liens on assets have to be paid if the property is to be kept.

Chapter 13 – “wage earner” - the Debtor submits information to show all assets and all liabilities; a Trustee is appointed to oversee the restructuring of debts.  Creditors are paid back in whole or in part as requested by the Debtors, and as approved by the court.