29 May Filing Bankruptcy and Your Bankruptcy Judge
When you file bankruptcy, you might think youâ€™ll have a trial in a courtroom with a judge ruling on whether you can discharge your debts. Clients in my Charleston, South Carolina bankruptcy practice often have that misconception of the bankruptcy process. It makes sense to think of a judge in a courtroom because thatâ€™s how things are done in most other types of cases such as divorces or other state court cases. But thatâ€™s not how it works in bankruptcy court.
Bankruptcy is a mostly administrative process. A bankruptcy trustee will be assigned to your case. The trustee, not the judge, will preside over your bankruptcy hearingâ€”called a “341 hearing” (after the Bankruptcy Code section) or “First Meeting of Creditors.” In the vast majority of bankruptcy cases, debtors never see the judge assigned to their case.
Bankruptcyâ€”at least most of the timeâ€”is more like a probate proceeding than, say, a divorce case. When I think of probate, I think of it as bankruptcy for dead people. Itâ€™s more than that, of course, but the probate and bankruptcy systems have similar elements (notice to creditors, a claims process, and distributions of property). Both are what we call an â€œadministrative proceeding.â€ Again, this is true most of the time.
Sometimes, however, you will appear before the bankruptcy judge. That could happen, for example, if an “adversary complaint” is filed against you, or if you file an “adversary complaint” against someone else. Then the administrative process turns into â€œlitigation.â€ Suing and perhaps suing back (called a â€œcounter complaintâ€), as well as depositions, interrogatories, requests for admissions, and subpoenas might all be part of the adversary proceeding. And for all that, youâ€™ll need a judge. The judge will also be the â€œfinder of factâ€ in most instances. That means heâ€™ll determine who wins and who loses after a trial.
Bankruptcy judges also need to rule on objections to confirmation in Chapter 13 cases. Most of the time, however, you’ll simply resolve objections to confirmation without the need for appearning in court.
Therefore, most of the time you wonâ€™t see a judge when you file bankruptcyâ€”and thatâ€™s not a bad thing! It just means youâ€™ve got a routine case in which thereâ€™s no need for a hearing or trial.
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