The procedural aspects of the bankruptcy process are governed by the Federal Rules of Bankruptcy Procedure (often called the “Bankruptcy Rules”) and local rules of each bankruptcy court. The Bankruptcy Rules contain a set of official forms for use in bankruptcy cases.
The Bankruptcy Code and Bankruptcy Rules (and local rules) set forth the formal legal procedures for dealing with the debt problems of individuals and businesses.
Bankruptcy Court in Each Judicial District
There is a bankruptcy court for each judicial district in the country. Each state has one or more districts. There are 90 bankruptcy districts across the country.
The bankruptcy courts generally have their own clerk’s offices. The court official with decision-making power over federal bankruptcy cases is the United States bankruptcy judge, a judicial officer of the United States district court. The bankruptcy judge may decide any matter connected with a bankruptcy case, such as eligibility to file or whether a debtor should receive a discharge of debts.
Much of the bankruptcy process is administrative, however, and is conducted away from the courthouse. In cases under chapters 7, 12, or 13, and sometimes in chapter 11 cases, this administrative process is carried out by a trustee who is appointed to oversee the case.
Bankruptcies are initiated by the filing of a petition by the debtor. The petition begins the case.
A bankruptcy trustee will be appointed to oversee the bankruptcy and perform certain tasks, such as liquidation in a chapter 7 bankruptcy proceeding.
Bankruptcy Schedules and Statements
After the petition, the debtor also must file schedules. These schedules will include necessary information, including the names and addresses of all creditors and assets of the debtor.
There are also certain statements the debtor must file. There are a series of questions the debtor must answer regarding the source of any income of the debtor, property transferred by the debtor, and lawsuits against the debtor by creditors.
There is a meeting of creditors that must be held, pursuant to section 341 of the United States Bankruptcy Code. During this meeting the debtor will be asked questions by creditors. The bankruptcy trustee may also ask the debtor questions.
These questions will relate to the financial affairs of the debtor. The debtor must answer these questions under oath.
Creditors’ and Trustee’s Objections
Within a limited time period after the meeting of creditors, creditors or the bankruptcy trustee may file objections to discharge of the debts of the debtor. If no objection is filed, the court may grant the debtor an automatic discharge of debts owed. If an objection is filed, an adversary proceeding begins.