How Is Bankruptcy Court Different from Other Courts?

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How Is Bankruptcy Court Different from Other Courts?

Bankruptcy courts have authority over all aspects of bankruptcy proceedings. These courts are part of the federal court system, and as with other courts, decisions by bankruptcy judges are binding. However, there are a few differences between bankruptcy courts and other courts you might not be familiar with.

The biggest difference between bankruptcy courts and other courts is simply the role that Bankruptcy courts play. Most courts are set up with a winner/loser scenario, where a person’s guilt or innocence is determined (criminal court), or a lawsuit is resolved (civil court). On the other hand, in bankruptcy court the end goal is to find a respectable midpoint between creditors who are owed money and a debtor who is not able to pay.

Appealing a bankruptcy court decision is also different from most appeals. Unlike most federal courts, Bankruptcy courts do not come from the Constitution. Bankruptcy courts were created by Congress. As a result, the first level of appeal in a bankruptcy proceeding is a federal trial court, not an appeal court. Some circuits, the First, Sixth, Eighth, Ninth and Tenth Circuits, use Bankruptcy Appellate Panels (BAP) to handle bankruptcy appeals instead. 

Finally, bankruptcy courts have smaller jurisdiction than other federal courts. This means that bankruptcy courts can only hear cases regarding core bankruptcy issues. If another issue arises, such as modification of child support, the bankruptcy court cannot hear it. In contrast, federal trial courts can address non-bankruptcy issues which arise, assuming that no other restrictions apply.

Do I Need an Attorney?

Many people choose to represent themselves in Bankruptcy court. Obviously, money is short for many people in this situation, and hiring a lawyer can be expensive. However, it must be noted that Bankruptcy courts strongly recommend that people hire qualified bankruptcy attorneys before filing bankruptcy. The cost of lawyer’s fees can be greatly outweighed by the value of discharged debts after a successful bankruptcy petition.

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Last Modified: 01-24-2014 03:27 PM PST

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