Bankruptcy courts are located within each of the ninety-four federal judicial districts. A bankruptcy petition cannot be filed in state court. Bankruptcy laws help people who can no longer pay their creditors obtain a fresh start by liquidating their assets to pay their debts or by creating a repayment plan.
Bankruptcy laws also protect troubled businesses and provide for orderly distributions to business creditors through reorganization or liquidation. These procedures are covered under Title 11 of the United States Code (the Bankruptcy Code). The vast majority of cases are filed under the three main chapters of the Bankruptcy Code, which are chapter 7, chapter 11, and chapter 13.