The Bankruptcy Court

Posted by Kevin on January 3, 2011 under Bankruptcy Blog | Be the First to Comment

In this blog, I write about the bankruptcy law.  The “law” is contained in the statute, court rules and case law.  In case law, the courts apply the statute and rules.

The Bankruptcy Court is part of the federal court system.  Federal courts are established by the Constitution of the United States.  The Supreme Court, the Circuit Courts of Appeal and the District Court are called Article III courts since they were set up under Article III of the Constitution.  Bankruptcy Courts were based on Article I, however.  In 1978, there was a major change in the bankruptcy statute.  One of the major changes was to bring  bankruptcy judges under Article III.  This meant that they served for life under good behavior and their salaries could not be reduced.  It also gave them the powers of a federal district judge in shaping orders.  Bankruptcy jurisdiction was still with the District Court which was an Article III Court but was required to be exercised by the Bankruptcy Court.

The Supreme Court knocked that down.  Bankruptcy Judges went back to being Article I judges with a 14 year term of office.  The District Court had the choice of referring bankruptcy issues to the bankruptcy courts or keeping jurisdiction.  All District Courts have opted to refer jurisdiction to the bankruptcy courts.  On a constitutional and perhaps academic level, this is a big change, but to the average person who files, it is of little or no consequence.  You still file your Petition with the Bankruptcy Court.

In New Jersey, there is one “district” for the entire state.  California has numerous districts.  Although there is one district, the court has offices and is in session in 3 locations:  Newark, Trenton and Camden.  For example, if you reside in Bergen, Passaic or Hudson counties, your case is assigned to Newark.  If you reside in Monmouth, Ocean or Mercer, your case is assigned to Trenton.  If you reside in Cape May or Camden, your case is assigned to Camden.