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Bankruptcy Newsletters

Case Closing and Reopening

Bankruptcy Case Closing Defined

Case Commencement

Under the Bankruptcy Code, a voluntary or involuntary case is commenced by filing a petition with the bankruptcy court. A Chapter 7 or 11 bankruptcy case may be initiated by a voluntary filing by the debtor or by an involuntary filing by the debtor’s creditors. Cases under all other chapters may be initiated only by a voluntary petition.

Dischargeability of Debt

Discharging a debt in bankruptcy means that the debt is eliminated or wiped out. However, not all types of debts can be discharged in a bankruptcy proceeding.

Employment Termination Based on Debtor Status

The law provides express prohibitions against discriminatory treatment of debtors by both governmental units and private employers. A governmental unit or private employer may not discriminate against a person solely because the person was a debtor, was insolvent before or during the case, or has not paid a debt that was discharged in the case.

Tax Claims

The treatment of tax debts in bankruptcy proceedings is an attempt to reconcile two conflicting policies. The first policy concerns the government’s interest in collecting taxes. The second policy concerns the fresh start that bankruptcy is to give honest debtors. Under the Bankruptcy Code, a debtor’s ability to discharge any tax debt is based upon the classification of that particular tax debt.

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