INTERPLAY BETWEEN FEDERAL COURT AND BANKRUPTCY COURT

The US Bankruptcy Court is a Subordinate court of the US District Courts as allowed in Article 3 of the US Constitution. Technically each filed bankruptcy begins in the US District Court and automatically gets transferred to the US Bankruptcy Court. (The Bankruptcy Court of the Central District of California is made up of 5 Courts; Los Angeles, Riverside, Santa Ana, San Fernando Valley, Santa Barbara).

Where the Debtor files the Bankruptcy Petition depends on where that Debtor resides. The Court’s link http://www.cacb.uscourts.gov/ identifies the proper venue based on Debtor’s zip code. Filing in the wrong venue can possibly lead to a dismissal of your case, however most Courts simply resolve to transfer your case to the proper venue.

District courts are authorized, but not required, to refer to bankruptcy judges cases under title 11, and proceedings arising under title 11, or arising in or related to cases under title 11. 28 U.S.C. § 157(a). Schulman v. Cal. Water Res. Control Bd. (In re Lazar), 200 B.R. 358, 366 (Bankr. C.D. Cal. 1996) (each district court is authorized to adopt general order of reference for bankruptcy cases). See Walls v. Wells Fargo Bank, N.A., 255 B.R. 38 (E.D. Cal. 2000) (district court exercising discretion not to refer claims involving FDCPA which might require jury trial).

If a party wishes to appeal a decision made in the Bankruptcy Court at the District level, that party has two possible venues to appeal the decision. 1)Bankruptcy Appellate Panel or 2) US District Court.

1. BAP(Bankruptcy Appellate Panel)

a. BAP appeals are thought to be quicker because they are heard by a panel of three judges with bankruptcy law expertise who do not have a backlog of criminal and civil case assignments as is common in the U.S. District Court.

b. Both parties need to agree to stay in. A party agrees to BAP if there is not a rejection filed within 30 days.

c. Reversing Court: This court is more likely to reverse decisions made in the lower level Court then the US District Court. Thus if a party is seeking to reverse then that party should elect to stay in BAP.

2. US District Court

a. 1 Panel Judge.

b. Affirming Court: Because the judge does not have expertise in bankruptcies he/she is more likely to affirm a decision made by a Judge who has Bankruptcy law expertise.

3. Appeals for BAP or US District Court

a. If a Party chooses to appeal the decision made by the BAP or the US District Court the proper venue for that appeal will be the 9^th Circuit Appellate Court.

4. Appeals from 9^th Circuit Appellate Court

a. Writ of Cert. for US Supreme Court( This topic of applying for Writ of Certiorari to the highest Court in the United States will be discussed in greater detail in a different post).

ALWAYS SEEK ADVICE FROM A LICENSED BANKRUPTCY ATTORNEY.

Differentiating HAVE TO file Bankruptcy clients and WANT TO file Bankruptcy clients.

Although bankruptcy is ONE option to deal with certain financial difficulties, sometimes doing nothing might be a better option. Thus, in an average case the general client’s will fit into one of three categories: 1) Shouldn’t file 2) Have to file 3) and Want to file. Following is a discussion on factors used to differentiate between the Have to File for bankruptcy clients and the Want to file for bankruptcy clients.

A HAVE TO Bankruptcy client generally has an urgent matter usually pertaining to that client’s loss of control over the asset. Including but not limited to;

1. Foreclosures

a. If facing a pending foreclosure, bankruptcy might be an option to consider in order to stop the pending sale and allow some breathing room.

2. Evictions (Unlawful Detainers)

3. Leases with defaults.

4. Judgment collections

a. Garnished Wages, Judgment Liens on Property, Bank levy.

5. Imposition of Judgment

6. Tax liens

If a client falls into the Have to file category, time is of the essence and seeking professional advice should not wait until it is too late. However, if a client does not fall into the Have to file category, Bankruptcy could still be an advantageous option. In this case the client should still consult with a professional to get a better understanding of the benefits and harms of filing for a Bankruptcy.

ALWAYS SEEK ADVICE FROM A LICENSED BANKRUPTCY ATTORNEY.