A bankruptcy judge is in charge of overseeing legal proceedings in which a person or business declares bankruptcy. There are specific rules and laws governing what happens when people are unable to pay their debts in the United States and most other countries. People who are unable to pay their bills and are too far in debt to ever begin to pay them off can file for bankruptcy. Not everyone can declare bankruptcy, and a bankruptcy judge is responsible for enforcing the laws to determine whether bankruptcy is the best course of action and whether it is legal.
Bankruptcy laws in the United States are governed by federal law. As a result, rather than being a state judge, a bankruptcy judge is a federal judge. This means he adheres to federal rules of court procedure in terms of how motions must be presented, the types of cases he hears, and the structure of arguments. This also means that if a bankruptcy judge grants a person the right to file for bankruptcy, he or she is protected from creditors across the country, not just in his or her home state.
An attorney representing a person who wants to file for bankruptcy will present their case to a bankruptcy judge. The attorney must show that the person is truly bankrupt under the law’s definition. After that, the judge will weigh the evidence to see if the person meets the federally defined definition of bankruptcy.
There are several different types of bankruptcy in the United States. Chapter 7 bankruptcy, for example, is a total bankruptcy in which the majority of a person’s debts are forgiven. Chapter 13 bankruptcy requires the bankrupt party to repay a portion of their debt over the course of a payment plan, whereas Chapter 11 bankruptcy is primarily used for business bankruptcies.
A judge will decide whether the parties filed the right kind of bankruptcy. He’ll do so by looking into their financial situation. To qualify for Chapter 7 bankruptcy, for example, a person’s income must be below a certain threshold.
The creditors who have a claim on the bankrupt person’s assets will then be heard by the bankruptcy judge. If there are any assets, the bankruptcy judge will decide how they are distributed to creditors. The law specifies who receives payment first, and the judge will determine who falls into which category and how the assets should be distributed to those parties.
The judge will also have to rule on the specific provisions if the party filing bankruptcy has filed for Chapter 13 bankruptcy or Chapter 11 bankruptcy. For example, in a Chapter 13 bankruptcy, the judge will make a decision on the payment plan that the debtor establishes to repay some of the creditors. If the business intends to stay open after a chapter 11 bankruptcy, the judge will have to sign off on, or review and rule on, the restructuring.