Bankruptcy in the United States

In the United States, bankruptcy is largely governed by federal law, commonly referred to as the "Bankruptcy Code" ("Code").^[1] The United States Constitution (Article 1, Section 8, Clause 4) authorizes Congress to enact "uniform Laws on the subject of Bankruptcies throughout the United States". Congress has exercised this authority several times since 1801, including through adoption of the Bankruptcy Reform Act of 1978, as amended, codified in Title 11 of the United States Code and the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).

Some laws relevant to bankruptcy are found in other parts of the United States Code. For example, bankruptcy crimes are found in Title 18 of the United States Code (Crimes). Tax implications of bankruptcy are found in Title 26 of the United States Code (Internal Revenue Code), and the creation and jurisdiction of bankruptcy courts are found in Title 28 of the United States Code (Judiciary and Judicial procedure).

Bankruptcy cases are filed in United States bankruptcy court (units^[2] of the United States District Courts), and federal law governs procedure in bankruptcy cases. However, state laws are often applied to determine how bankruptcy affects the property rights of debtors. For example, laws governing the validity of liens or rules protecting certain property from creditors (known as exemptions), may derive from state law or federal law. Because state law plays a major role in many bankruptcy cases, it is often unwise to generalize some bankruptcy issues across state lines.

^ Friedland & Cahill, Jonathan P. & Christopher M. (2021). Commercial Bankruptcy Litigation. Toronto, Ontario, Canada: Thomson Reuters. §1:6. ISBN 978-1-5392-3368-8
^ See 28 U.S.C. sec. 151.

[1] Friedland & Cahill, Jonathan P. & Christopher M. (2021). Commercial Bankruptcy Litigation. Toronto, Ontario, Canada: Thomson Reuters. §1:6. ISBN 978-1-5392-3368-8

[2] See 28 U.S.C. sec. 151.

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