Differences Between the Federal Rules of Bankruptcy Procedure and the Bankruptcy Code
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Differences Between the Federal Rules of Bankruptcy Procedure and the Bankruptcy Code?

When filing your bankruptcy petition, you will not go to a state courthouse. To begin your bankruptcy case, you will file your bankruptcy petition at the federal bankruptcy court clerk. This is because bankruptcy is governed by federal law, specifically  11 U.S. Code Title 11.

For example, Title 11 of the United States Code contains the federal law permitting for a Chapter 7 or Chapter 13 bankruptcy – this is referred to as the bankruptcy code. The Federal Rules of Bankruptcy Procedure provide guidance that assists the bankruptcy courts in carrying out the bankruptcy law.

The Bankruptcy Code

Bankruptcy is meant to give petitioners a fresh start financially by wiping out certain debts to creditors. To have these debts discharged, a debtor must give up unexempt property (in some instances, the debtor may not have to give up property) or a portion of his/her future disposable income (this is the debtor’s net income after necessary and reasonable expenses such as their home, car, food, etc.). The law that permits the discharging of debts in exchange for property or income is within the bankruptcy code.

The bankruptcy code defines the following:

  • Who may file for bankruptcy; 
  • What the debtor must do;
  • The duties of the trustee;
  • Which property is part of the bankruptcy estate;
  • Which debts get discharged;
  • Which debts can not be discharged;
  • By when a creditor must file a proof of claim and what it must contain; and
  • the order in which a proof of claim receives payments from the bankruptcy estate.

The bankruptcy code is broken down into many chapters, and the initial three chapters of the bankruptcy code pertain to all bankruptcy cases regardless of the type of bankruptcy that is filed:

The remaining six (6) chapters cover each of the bankruptcy types:

  • Chapter 7 – is for liquidation bankruptcy;
  • Chapter 9 – is for the reorganization of municipalities;
  • Chapter 11 – is for the reorganization of businesses or individuals;
  • Chapter 12 – is for the reorganization of family farmers and fishermen;
  • Chapter 13 – if for the reorganization of individuals only via a 3 to 5-year payment plan;
  • Chapter 15 – is for ancillary and separate cross-border cases.

The Federal Rules of Bankruptcy Procedure

Like every court system in the country, be it state or federal, each has a system of rules defining how each case should progress. In the bankruptcy realm, the Federal Rules of Bankruptcy Procedure defines how each case should progress under the bankruptcy code.

Congress gave explicit authority to the U.S. Supreme Court to write the Bankruptcy Rules that govern bankruptcy procedure in bankruptcy cases. According to Bankruptcy Rule 1001, these rules are meant to be used by the bankruptcy court and individuals to ensure a fair, expeditious, and inexpensive resolution of every case.

How does the Bankruptcy Code and Federal Rules of Bankruptcy Procedure Function Together

The Bankruptcy Rules were designed by the Supreme Court to implement bankruptcy code sections. The rules define how the case should be conducted. For example, the rules below form a uniform scheme that all bankruptcy courts adhere to when handling a bankruptcy case:

If the bankruptcy rules ever conflict with the bankruptcy code, the bankruptcy code prevails.

Local Bankruptcy Rules

The bankruptcy courts within each federal district are permitted to establish rules for the district. These local bankruptcy rules address procedures for filing motions in the court, entering orders, and filing local bankruptcy forms that each jurisdiction may require.

Bankruptcy Judge-Specific Guidelines

Most bankruptcy judges have enacted their own set of rules regarding courtroom conduct. These rules explain the judge’s requirements for hearing procedures, filing emergency motions before the court, how telephonic or video hearings are handled, and other issues.

You may find each specific judges’ rules for the Southern District of Florida here

Contact a Miami Bankruptcy Attorney

If you have questions regarding the Differences Between the Federal Rules of Bankruptcy Procedure and the Bankruptcy Code, contact a Miami Bankruptcy Attorney and get the answers you need.