This report examines the legal procedures for effecting either a liquidation or a business or consumer reorganization under one of three of the five operative chapters of the United States Bankruptcy Code, 11 U.S.C. § 101 et seq . Chapter 7 of the Code governs liquidation of the debtor's estate and is often referred to as a "straight bankruptcy." Chapter 11 of the Code governs business reorganizations, and chapter 13 governs consumer reorganizations which conform to prescribed statutory debt limits. The United States Constitution expressly delegates to the Congress the power "To establish. . .uniform Laws on the subject of Bankruptcies throughout the United States." It was not until 1800, however, that the United States enacted its first bankruptcy law, and that act was repealed shortly thereafter in 1803. Enactment of the law was motivated by severe financial panics in the 1790's that resulted in the imprisonment of many debtors. A second act was approved August 19, 1841 and repealed in 1843. Like its predecessor, the act of 1841 arose from a period of economic hardship and was short-lived. A subsequent law, the act of 1867, followed the financial disturbances incident to the Civil War. In effect for more than a decade, it was repealed in 1878. Thus, throughout a period of some 78 years, a national bankruptcy law was operative for only 16. After the repeal of the act of 1867, a period of some 20 years would pass before another bankruptcy act was forthcoming—the act of 1898. The act of 1898 followed a depression of several years duration beginning in 1893. Among the reasons cited by Congress in support of a new and permanent bankruptcy law was the increasing availability to the public of an expanding network of federal courts, and increasing national growth of both population and commerce. The 1898 Act was amended at various times but underwent a comprehensive revision and modernization in 1938. These amendments, effected by a law known as the Chandler Act, recast the relief provisions that had been added to the 1898 Act, established wage earner plans, and substituted or replaced provisions dealing with real property arrangements and corporate reorganizations. Changes in the act subsequent to the 1938 amendments were relatively slight. Eventually, Congress perceived a need to modernize the bankruptcy laws, and, in 1970, it created a Commission on the Bankruptcy Laws of the United States to study and recommend changes in the law. The Commission became operational in June, 1971, and filed its final report with the Congress on July 30, 1973. Among the reasons expressed by Congress for enactment of a new and modernized Bankruptcy Code was that the substantive law of bankruptcy embodied in the act of 1898 reflected "the horse and buggy" era of consumer and commercial credit; that the widespread adoption of the Uniform Commercial Code in the early 1960's changed and expanded commercial financing; that bankruptcy relief for the consumer debtor was inadequate; and, that the bankruptcy court system was too frequently an inefficient and unfair forum. Hence, the stage was set for a national debate on the bankruptcy laws. In 1978, Congress repealed the act of 1898 in its entirety and enacted the present Bankruptcy Code, the Bankruptcy Reform Act of 1978. Since the Code's enactment in 1978, it has undergone several major amendments. The Bankruptcy Amendments and Federal Judgeship Act of 1984 cured constitutional deficiencies in the bankruptcy court system and made a wide variety of substantive and technical amendments to the Code. The Bankruptcy Judges, United States Trustees, and Family Farmer Bankruptcy Act of 1986 instituted a nation-wide U.S. Trustee system and added a new operative chapter governing reorganizations of "family farmers." In 1988, Congress enacted several substantive amendments to the Code, including the Retiree Benefits Bankruptcy Protection Act, which added a new section governing the rights of retirees of a corporation undergoing a chapter 11 reorganization. During the 101 st Congress, more amendments were enacted. In addition to technical amendments affecting swap agreements and forward contracts, legislation was passed altering the dischargeability under chapters 7 and 13, respectively, for debts for liability incurred while driving while intoxicated, criminal restitution, and student loans. The Comprehensive Thrift and Bank Fraud Prosecution and Taxpayer Recovery Act of 1990 made many amendments designed to strengthen criminal prosecution of and recovery from crimes against banks. The most recent congressional enactment making wide-reaching substantive and procedural amendments to the Code took place pursuant to the Bankruptcy Reform Act of 1994. Among its highlights was the creation of a National Bankruptcy Review Commission, patterned after the 1970 Commission, to study and report within two years recommendations for legislative or administrative action to the President, the Congress, and the Supreme Court. The Commission issued its report on October 20, 1997. In a lengthy report of approximately 1300 pages, the Commission adopted as many as 172 recommendations dealing with, inter alia, consumer bankruptcy, business bankruptcy, municipal bankruptcy, and, bankruptcy jurisdiction, procedure, and administration. On the subject of consumer bankruptcy reform, the Commission could not reach consensus. Recommendations were adopted by a 5-4 split vote, which undermined the persuasive value and influence on the Congress of the Commission's report. Important procedural reform effected by the 1994 Act included express authorization for bankruptcy courts to conduct jury trials with the consent of parties thereto. The act also encouraged nation-wide creation of Bankruptcy Appellate Panels as intermediary, specialized review tribunals positioned between U.S. district court and the circuit courts of appeals. This law also incorporated sanctions into the Code for negligent or fraudulent bankruptcy petition preparers and amends federal criminal law to establish additional penalties for bankruptcy fraud. The 105 th Congress considered, but did not enact, major bankruptcy reform legislation. Several provisions were enacted, however, including the Religious Liberty and Charitable Donation Protection Act, permitting debtors to make substantial charitable donations prior to filing and during the course of a chapter 13 reorganization. Other provisions narrowed the dischargeability of student loans, and effected amendments to the automatic stay. During the 106 th and 107 th Congresses, bankruptcy reform legislation, including provisions to effect major changes to consumer bankruptcy, continued to be debated. Enactment did not occur and reform proposals are still under consideration in the 109 th Congress. The Code is divided into eight chapters—chapters 1, 3, 5, 7, 9, 11, 12, and 13. Chapters 1, 3, and 5 govern general procedures involving management and administration of the bankruptcy estate which are applicable, as specified, to the operative chapters. Chapters 7 through 13, the operative chapters, address the different forms of bankruptcy relief, i.e., liquidation or the various categories of reorganization—municipal, business, family farmer, and consumer. Also codified under Title 11 of the United States Code are Rules of Bankruptcy Court and officially authorized bankruptcy forms. Examined below are substantive highlights of the procedural and operative provisions of the U.S. Bankruptcy Code governing liquidation and reorganization. Any debtor that is a person, partnership or corporation residing, domiciled, having property or a place of business in the United States may file for relief under the Bankruptcy Code, except that: 1. Several entities may not file for liquidation under chapter 7, namely, a railroad, an insurance company, bank, savings bank, cooperative bank, savings and loan association, homestead association, small business investment company, credit union, or federally guaranteed industrial bank. 2. A chapter 11 reorganization may only be filed by debtors that may file under chapter 7 (with the exception of railroads, stockbrokers, and commodity brokers who may also file under chapter 11.) 3. A chapter 13 reorganization is limited to an individual (and spouse) with regular income (except stockbrokers and commodity brokers) whose aggregate unsecured and secured debts are less than $307,675 and $922,975 respectively. 4. No individual or family farmer may file who has been a debtor in a case pending in the preceding 180 days if the case was dismissed for willful failure of the debtor to abide by orders of the court, or to appear before the court in proper prosecution of the case, or if the debtor obtained a voluntary dismissal following the filing of a request for relief from the automatic stay. 11 U.S.C. § 109. A voluntary case is commenced when the debtor files a petition under the operative chapter of the Code in which the debtor desires to proceed. A husband and wife may file jointly, in which case the court will determine the extent, if any, to which the debtor's estate shall be consolidated. Commencement of a voluntary case constitutes an order for relief. 11 U.S.C. §§ 301, 302. An involuntary, that is, a creditor-initiated bankruptcy may be commenced under chapter 7 or 11 of the Code. Among the creditor groups entitled to file is a group comprised of three or more creditors who hold at least $12,300 in noncontingent, nondisputed claims. Farmers, family farmers, and non-moneyed, noncommercial corporations may not be forced into bankruptcy involuntarily. Although creditors may file a petition under the Code, it does not operate as an order for relief. The debtor may controvert the petition at trial, and until the court finds for the creditors and enters an order for relief, the debtor may operate its business as if a petition had not been filed. The court may, however, appoint either an interim trustee or a U.S. Trustee to manage the estate of the debtor pending an order for relief if the court believes it is necessary to preserve the estate. The court may enter an order for relief against a debtor if, at trial, it finds that the debtor is generally not paying debts as they become due, or, if, within 120 days before the filing of the petition, a custodian was appointed or took possession of substantially all of the debtor's property.