Facts about Bankruptcy Courts… As specified by the US Bankruptcy Code, a bankruptcy case is under federal jurisdiction. Although there may be state specific laws imposed all throughout the country, federal jurisdiction encompasses these laws. For every federal court district, a special bankruptcy court is present with the single responsibility of handling bankruptcy cases. If you are planning to file for bankruptcy, you have to know some facts about bankruptcy courts and how the whole bankruptcy procedure works.
The foremost function of a bankruptcy court is to administer and supervise bankruptcy cases. Since bankruptcy declaration involves a complex process, the bankruptcy court performs a lot of tasks. These tasks include the following:
It is the bankruptcy court’s duty to issue an order for every debtor who wants to file for bankruptcy protection to undergo a credit counseling program from an accredited counseling agency within 180 days before the formal bankruptcy petition.
The bankruptcy court is also in charge of reviewing all the paperwork submitted by the debtor upon filing for bankruptcy. It ensures that no vital information is left out or intentionally left out to pass the process.
The court also randomly assigns a trustee to assist in the bankruptcy proceedings. It is the trustee’s duty to act as the mediator between the debtor and the creditors.
It is the bankruptcy court that determines the priority structure of creditors for the payment of the debts during a liquidation process in Chapter 7 and in the repayment plan in Chapter 13.
The bankruptcy court informs the creditors and the debtor of the details of the 341 meeting.
During a Chapter 13 proceeding, the bankruptcy court’s presiding judge will determine if the repayment plan presented by the debtor is viable.
It is also the duty of the bankruptcy court to impose an automatic stay to the creditors to prevent them from further contacting the debtor.
There are many misconceptions involved in the role of bankruptcy courts in a bankruptcy proceeding. Contrary to what most individuals believe, only minimal interaction is needed between a debtor and his creditors in front of a bankruptcy judge. Most of the duties will be relegated to the trustee assigned in the bankruptcy case.
Since bankruptcy courts act in the best interest of the debtor and the state, it gives out fair judgment in bankruptcy cases. It makes sure that the debtor filing for bankruptcy protection is in dire need of a fresh financial start or just debt reorganization to pay for outstanding debts. There have been many bankruptcy fraud cases in the past because some citizens have abused the system thinking that the only way out a financial crisis is bankruptcy. In fact, the bankruptcy court has helped a lot of debtors who have been denied the Chapter 7 protection to reevaluate their stand against bankruptcy. It is not the end-all and be-all.
Lastly, the bankruptcy process is intricate and bankruptcy court is quite in all its proceedings. Retain the services of a lawyer who will know what to do and is familiar with the bankruptcy court in your state. This is your best chance to avail of bankruptcy protection successfully.