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Los Angeles Bankruptcy Lawyers / Blog / Bankruptcy / The Bankruptcy Court System

The Bankruptcy Court System


The bankruptcy court system is a specialized branch of the federal judiciary tasked with handling bankruptcy cases. It operates under the United States Constitution and the Bankruptcy Code, ensuring that debtors receive a fresh start while treating creditors fairly.

Structure of the Bankruptcy Court System

Bankruptcy courts are distinct units within the federal court system, separate from district courts, although they are part of the same judiciary structure. Each of the 94 federal judicial districts has a bankruptcy court. Bankruptcy judges appointed by the United States Court of Appeals for 14-year terms preside over these courts. They have the authority to make legal decisions on all matters arising under the Bankruptcy Code.

How Bankruptcy Court Works

Unlike criminal, civil, and family cases heard in state courts, bankruptcy cases are handled in federal courts due to their basis in federal law. However, state laws do influence certain aspects, particularly regarding which of a debtor’s assets are considered exempt and can be retained.

Federal Jurisdiction and Filing Requirements

The United States is divided into 94 federal judicial districts, each with its own bankruptcy court. According to federal law, bankruptcy cases must be filed in the district where the debtor’s primary residence, business, or principal assets have been located for a designated period. This ensures that the case is handled in the most relevant jurisdiction.

Appointment and Role of Bankruptcy Judges

Bankruptcy judges are appointed by the United States Court of Appeals and serve 14-year terms. These judges preside over bankruptcy proceedings, which are generally public unless sealed by the court. The public can access these records at a bankruptcy clerk’s office or through the Public Access to Court Electronic Records (PACER) website.

Procedures in Bankruptcy Court

Once a debtor files a bankruptcy petition, the court evaluates their financial situation. The primary goal is to determine how the debtor’s assets can be used to repay creditors. This evaluation involves several key steps:

  1. Filing the Petition: The debtor submits a detailed petition outlining their financial status, including assets, liabilities, income, and expenses.
  1. Automatic Stay: Upon filing, an automatic stay halts most collection activities against the debtor, providing temporary relief from creditors.
  1. Meeting of Creditors (341 Meeting): The trustee, appointed by the U.S. Trustee Program, and creditors can question the debtor under oath about their financial affairs.
  1. Asset Evaluation and Repayment Plan: In Chapter 7 cases, non-exempt assets may be liquidated to pay creditors. In Chapter 13 cases, a repayment plan is proposed to manage debts over three to five years.

Discharge of Debts

One of the main objectives of bankruptcy is to discharge certain debts, relieving the debtor of the obligation to pay them. However, some debts are not dischargeable, including:

  • Tax claims
  • Child support
  • Alimony payments
  • Personal injury debts resulting from DUI
  • Debts involving secured property (e.g., car loans)

Creditors can still enforce liens on secured property, allowing them to take possession if the debtor defaults on the loan.

The Importance of Legal Guidance

Navigating bankruptcy laws and court procedures can be complex. Consulting with a knowledgeable bankruptcy attorney is crucial to understanding your options and ensuring your rights are protected. An attorney can help you prepare and file your petition, represent you in court, and negotiate with creditors to achieve the best possible outcome.

Contact Wadhwani & Shanfeld

Navigating the bankruptcy court system can be complex and daunting without professional guidance. If you are considering bankruptcy and need expert assistance, contact Wadhwani & Shanfeld. Our experienced bankruptcy attorneys are dedicated to helping clients understand their options and achieve the best possible outcomes. Reach out to us today for a consultation and take the first step towards financial relief and stability.



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