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DEFINITION of 'Bankruptcy Court'

Bankruptcy courts are specialized, federal courtrooms created to settle all types of both personal and corporate bankruptcy cases. Unlike the federal court, which was established by the US Constitution, the bankruptcy court system was established by an act of congress in 1978 as part of the Bankruptcy Reform Act.

BREAKING DOWN 'Bankruptcy Court'

While most criminal, civil and family cases are heard in state courts, bankruptcy must be filed in a federal court, as the laws governing the bankruptcy process are federal, not state laws. There are 94 federal judicial districts throughout the United States, and each district has a bankruptcy court. The Federal Rules of Bankruptcy Procedure govern the bankruptcy process, maintaining consistency from state to state. The United States Court of Appeals appoints bankruptcy judges, who serve 14-year terms.

Federal law requires that a bankruptcy case be filed and heard in the judicial district that is the primary residence, place of business or site of the principal assets of the filer. If the filer disagrees with the bankruptcy judge’s decision, there is an appeal process. Appeals are generally handled by an appellate court, and many judicial circuits have bankruptcy-specific appellate courts to handle such disputes.

 

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