Chapter 9 Bankruptcy Law
A San Jose bankruptcy attorney discusses Chapter 9 Bankruptcy
Chapter 9 bankruptcy law is probably the least known and most uncommon form of bankruptcy. Chapter 9 bankruptcy law was created in 1934 as an effort to assist financially-distressed municipalities. Chapter 9 bankruptcy law provides municipalities protection from its creditors while it develops and negotiates a plan for reassessing its debts. Under chapter 9 bankruptcy law, a municipality is free to negotiate both the principal and the interest of its loans and debts, even refinancing at times. One of the most famous chapter 9 bankruptcy cases was filed in 1994 by Orange County, California which involved millions of dollars of debts.
In order for a municipality to be eligible for protection under the chapter 9 bankruptcy law, it must be a “political subdivision or public agency or instrumentality of a State.” Chapter 9 bankruptcy law is governed, ironically, by Section 9 of the U.S. Bankruptcy code.
Municipalities may seek protection under chapter 9 bankruptcy law by filing a petition with the court which contains a list of creditors. The petition is then assigned to a chapter 9 bankruptcy judge. As with chapter 7 and chapter 13 bankruptcies, a creditor is allowed to file an objection to the petition and request relief from stay in order to attempt to collect on its account receivables. However, unlike chapter 7 and chapter 13 bankruptcies, the United States Trustee has much more limited power and control in that he/she cannot propose an alternate reorganization plan. Once the chapter 9 bankruptcy plan is approved, it becomes the new structure of the municipality.
If you have a question regarding Bankruptcy in San Jose please contact us at 408.279.2288 or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys. After you have spoken with one of our San Jose bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you. Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your case. If you have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down, stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your financial needs. Please feel free to complete our free bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.
