If you have read anything at all about bankruptcy, you probably know that bankruptcy laws are federal. That means that the way the law is applied is uniform all across the country, right? Whether you live in New York, California, Wyoming or Georgia, bankruptcy laws will be just the same, won’t they? Well, maybe not.
For one thing, though the bankruptcy code is a federal law, it modifies rights and remedies created under state laws (like contract law) and in some instances adopts state law for purposes of determining those rights and remedies. For example, the bankruptcy law allows states to determine their own exemptions, i.e., what property you get to keep after bankruptcy.
Bankruptcy law also looks to state law to determine what an enforceable debt is, or how to record a lien. So, there are many cases where differences in state laws may mean a different outcome in bankruptcy.
In addition to differences in state laws, there are many and significant differences in practice and procedure from district to district, and sometimes from judge to judge. In addition to the Federal Rules of Bankruptcy Procedure, which apply in all courts, each court has the ability to enact what are called “Local Rules,” and which are just what they sound like–rules that apply locally, to the particular district in which you are filing your case. Even more specifically, some judges will issue operating orders which apply only to cases assigned to that one judge.
Local Rules and operating orders should never conflict with the law or with the federal rules, but there are an awful lot of gaps in the law and the federal rules that have been filled in by Local Rules. In South Carolina, where I practice, we have a court and a bankruptcy bar that has historically been very active and cooperative in the drafting and implementation of Local Rules, and I understand that we have one of the more comprehensive sets of Local Rules (and accompanying forms). Our Local Rules cover everything from how to schedule a motion hearing, to amending a Chapter 13 plan, to applying for attorney fees, and our Local Rules have a detailed set of forms and instructions.
Sometimes there are also differences in how a particular judge has interpreted the law, or in the way she runs her courtroom. The same is also true for various trustees. They aren’t trying to create an exclusive club that excludes the uninitiated; they have simply established procedures to help administer cases as efficiently as possible.
Understanding differences related to state laws, local rules, and the preferences of various judges and trustees is a minefield for the uninitiated. Those differences account for a lot of the misinformation about bankruptcy that you may run across, and why generalizations about specific bankruptcy cases should be labeled “your results may vary.” It is also one of the best reasons I know to look for a bankruptcy attorney who is experienced and well-versed in those differences. As in most of life’s endeavors, it helps to have a copy of the rule book when you decide to play the game.
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