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Bankruptcy Essentials: Chapter 7 Liquidation
The Bankruptcy Courts were created under Article 3 of the United States Constitution. They are courts of original jurisdiction and part of the Federal Court System. There is one uniform Bankruptcy Code although each state has its own State Rules for certain aspects of the bankruptcy process. Bankruptcy Judges are appointed for life tenure just the same as Federal and Circuit Court Judges and Supreme Court Justices.
The Bankruptcy system was created to assist both individuals and businesses when their debts are in excess of their assets and more importantly – their income. It is considered a “fresh start” and is the system the United States chose rather than continuing with debtor’s prisons or more comprehensive relief through social programs. Some might say it is the capitalist alternative to socialism.
A concise history of the formation of what is now the Bankruptcy Code may be of additional interest.
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