Court Structure and Appeals

Posted by Kevin on January 4, 2011 under Bankruptcy Blog | Be the First to Comment

Yesterday, I gave you an overview of the court system.  Today, I want to tell you how a case moves through the system.

Most Chapter 7 debtors never see the inside of a court room.  That is because their cases are handled administratively by the Clerk and the Trustee.  If that happens in your case, be thankful.  It means that everything went all right and you got your discharge.

If a creditor challenges a claim or the trustee challenges your right to a discharge or an exemption, you may find yourself in the court system.

For bankruptcy, the first (and usually only) level of the court system is the bankruptcy court.  This is called a trial level court.  The bankruptcy judge usually decides both the facts and the law, although in certain circumstances a jury trial can be available.

If the bankruptcy court makes a decision, and one of the parties wants to challenge that decision, the first level of appeal is the US District Court.  This confuses some laymen and even some attorneys because the District Court is the trial court for most federal cases.  In bankruptcy, however, the District Court hears appeals.

The next level of appeal is the 3d Circuit Court of Appeals.  New Jersey, Delaware, Pennsylvania and the Virgin Islands comprise the 3d Circuit.

After the 3d Circuit is the Supreme Court.

The current bankruptcy law is referred to as BAPCPA.  Many practitioners believe that the law was not carefully drafted.  That has led to conflicting decisions at the bankruptcy court level both around the country and within a district.  BAPCPA is winding its way through the appeals courts.  As cases hit higher court levels, the law should become clearer at least within a circuit.  However, when the circuits come to different conclusions about the same issue, then it is up to the Supreme Court to settle the issue.