Bankruptcy and The Federal Courts

US Federal Bankruptcy: Introduction

Any bankruptcy, whether it is a personal bankruptcy or a business bankruptcy, is enforced and administered through the US federal bankruptcy court system. Your local, or state court, will not decide bankruptcy matters. The court responsible for enforcing and administering any bankruptcy filing is called the US federal bankruptcy court. Like all other federal courts, US federal bankruptcy court is governed and regulated by Congress and the President. The bankruptcy court is a branch of the United States District Court.

The US federal bankruptcy court is the court where all bankruptcy cases within a federal district are filed. It functions, like most courts, as the place where disputes about bankruptcy cases and issues are raised and resolved. The US federal bankruptcy judge has authority to pass judgment on whether a person qualifies for a bankruptcy, whether or not a debt is discharged in bankruptcy, whether or not a bankruptcy reorganization plan meets all legal requirements, and handles all bankruptcy related requests made by bankruptcy filers.

If the losing party is unhappy with the ruling of the federal bankruptcy judge, the losing party has the right to appeal, or ask for a higher court to review the legal matters involved that are still in dispute. The higher court can either agree with the bankruptcy court’s decision or disagree, and overturn the bankruptcy court’s decision. Some matters in bankruptcy court will be appealed directly to a district court. In some jurisdictions, there are “bankruptcy appellate panels” that hear appeals directly from the bankruptcy court. Some types of matters can be appealed directly to the appellate court. Ultimately, matters could work their way through the court system all the way to the United States Supreme Court. The United States Supreme Court is the highest court in the land and its jurisdiction includes disputes over bankruptcy matters. If the United States Supreme Court makes a decision on a legal issue there no courts that can overturn or review that decision. Absent a change in the law by Congress and the president, the legal matter is considered settled.

US Federal Bankruptcy: Chapter 7

The extent to which a US federal bankruptcy court and a US federal bankruptcy judge will be involved in particular case might depend on which type of bankruptcy case is filed. In personal Chapter 7 Bankruptcy cases, the US federal bankruptcy court and a US federal bankruptcy judge are typically limited in their involvement. A person who files for Chapter 7 Bankruptcy case will more than likely not have to appear in a court nor have to appear before a bankruptcy judge. The US federal bankruptcy judge in a Chapter 7 Bankruptcy case is typically not involved until signing the discharge order. Under some circumstances, a US federal bankruptcy judge might be asked to rule whether or not the bankruptcy protection should be removed form a Chapter 7 Bankruptcy filer’s property or to render an opinion if a particular person is eligible for a Chapter 7 Bankruptcy.

US Federal Bankruptcy: Chapter 13

The US federal bankruptcy court and a US federal bankruptcy judge take a more active role in a Chapter 13 Bankruptcy cases. Unlike a Chapter 7 Bankruptcy, a Chapter 13 Bankruptcy involves a repayment plan, and a US federal bankruptcy judge must make a ruling on whether or not the plan proposed by the Chapter 13 Bankruptcy filer is legally sufficient to pay his or debt debts in accordance with bankruptcy laws. In addition, the a US federal bankruptcy judge in Chapter 13 Bankruptcy, may be asked to rule on whether or not a claim for payment filed by a creditor is valid. A US federal bankruptcy judge will also rule on requests by the Chapter 13 Bankruptcy filer to incur new debt, or requests for refinance existing debt. A US federal bankruptcy judge may also be asked to dismiss a case for the failure for a Chapter 13 Bankruptcy filer to make his or her Chapter 13 Bankruptcy payments or remove the bankruptcy protection form a home or a car for Chapter 13 Bankruptcy filer’s failure to make post filing payments. The US federal bankruptcy court and a US federal bankruptcy judge takes a more active role in a Chapter 13 Bankruptcy case.

Learn more about Federal bankruptcy laws