Bankruptcy provides individuals and entities with an opportunity to get back on top of debt. This opportunity may be provided through liquidation of assets, or through the creation of a reasonable repayment plan through which the individual or entity can comply.
Federal Bankruptcy Courts and Litigation
Each of the 94 federal judicial districts handles bankruptcy matters, and in almost all districts, bankruptcy cases are filed in the bankruptcy court. Bankruptcy cases cannot be filed in state court.
Litigation in the bankruptcy court is conducted in much the same way that civil cases are handled in the district court. There may be discovery, pretrial proceedings, settlement efforts, and a trial.
Objections in bankruptcy court by creditors or by the trustee may be made for several reasons. Objections are made by the creditor or the trustee when the creditor or trustee dispute a position taken by the debtor.
- Disputes may arise over who owns certain property or how it should be used.
- Disputes may arise over the value or worth of property.
- Disputes may arise over the amount of debt owed by the debtor.
- Sometimes disputes arise over whether the debtor should receive a discharge of some debt or type of debt.
- There are other issues as well that may lead to disagreement, such as the amount that lawyers, accountants, or other people hired to complete the bankruptcy process should be paid for their services.
The objections that a creditor or wishes to make must be done within 60 days of the date scheduled for the 341 creditors’ meeting. If that meeting is continued, the deadline for objection does not change with the date of the meeting. The deadline for objections remains 60 days after the first date for which the meeting was scheduled.
There is a process for filing appeals of the decisions made by the bankruptcy court.
Bankruptcy Appellate Panels are 3-judge panels authorized to hear appeals of bankruptcy court decisions. These panels are a unit of the federal courts of appeals.
Bankruptcy Appellate Panels (BAPs) were established under the Bankruptcy Reform Acts of 1978 and 1994. 28 U.S.C. §158 sets forth jurisdiction for appeals of bankruptcy decisions and authorizes the establishment of BAPs upon the order of the circuit judicial councils. BAP judges continue to serve as active bankruptcy judges in addition to their duties on the appellate panel.
Appeals from dispositive orders of bankruptcy judges may be taken to the district court or the BAP (if one has been established and the district has chosen to participate) with further appeal as of right to the court of appeals for the circuit.
In accordance with requirements of federal statutes and procedural rules, parties may elect to file an appeal of a bankruptcy court decision with the BAP or with the district court.