It Is The Bankruptcy Court That Handles All Matters Relating To Bankruptcy
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
The Role of Bankruptcy Courts in the U.S. Judicial System
Overview:
The U.S. Constitution's Article III establishes the judiciary as one of the three distinct federal branches, alongside the legislative and executive branches. Federal courts, as constitutional guardians, safeguard citizens' rights and liberties. An independent judiciary ensures fairness and justice for everyone in the United States.
Federal Judicial Districts and Bankruptcy:
There are 94 federal judicial districts, each with its own bankruptcy court responsible for handling all bankruptcy-related matters. Individuals cannot file for bankruptcy in state courts. Instead, bankruptcy laws assist those unable to repay creditors by liquidating assets to settle debts or creating a repayment plan.
Bankruptcy courts and laws also support troubled businesses by ensuring orderly debt settlement through reorganization or liquidation. These procedures are governed by Title II of the Bankruptcy Code. Most cases fall under Chapters 7, 11, or 13 of the Bankruptcy Code.
Function and Structure of Bankruptcy Courts:
The U.S. bankruptcy courts are federal entities managing bankruptcy cases. Bankruptcy judges, serving 14-year terms, are appointed by the U.S. Court of Appeals and operate across the 94 districts, forming a unit within each district court.
Technically, U.S. district courts are empowered to manage bankruptcy cases but typically delegate these to bankruptcy courts. Initially, all bankruptcy matters are addressed by the bankruptcy court. However, in exceptional cases, the district court can reclaim a case from the bankruptcy court to make a ruling. Generally, a bankruptcy judge handles these matters, with decisions being final unless appealed to a district judge for review.
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