Bankruptcy: Don’t Get Home-Towned

11 Dec Bankruptcy: Don’t Get Home-Towned

fed districtsThe U.S. Constitution grants Congress the power to establish uniform laws on bankruptcy. Our bankruptcy law is a federal law administered by the U.S. courts.

But, does that make it the same from state to state? It certainly does not. Although the main framework of the law applies across the country, the specifics of many provisions vary greatly from state to state, and even from district to district within a state.

Some states are more pro-chapter 13 than others. For example, in the Eastern District of California, where I practice, we file about 2 to 3 times as many chapter 7 cases as chapter 13 cases. But in Tennessee, the opposite occurs.

Each court seems to have its share of local customs. These can include the following:
1. specifics for how the general bankruptcy law is interpreted;
2. what isthe role of the trustee in the bankruptcy process; and
3. how the U.S. Bankruptcy Rules are actually administered.

Many districts have their own form of chapter 13 plan. In Sacramento, where I practice, we use a form for all chapter 13 plans, which is considerably different from the plan formused 60 miles away in the Northern District of California (San Francisco). There is a move to use a standard form for all chapter 13 plans in the country, but it’s still in the “talking” stage. My guess is that it will still be interpreted differently depending on district.

The rule here is obvious: if you’re going to file bankruptcy, hire someone in your area who knows the local customs. It’s far easier to walk into a bankruptcy hearing (even the first meeting of creditors) with someonewho knows the bankruptcy trustee and is familiar with him, than to go into the hearing with a representative who, like you, has never been there before.

Don’t get home-towned: hire local counsel.



image credit: Wikipedia


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Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.
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