BASICS FOR NON-BANKRUPTCY LAWYERS
bankruptcy court’ s jurisdiction. See 28 U. S. C. § 157( b)( 2). Bankruptcy courts can also hear proceedings that are not core proceedings but that are otherwise related to title 11. See 28 U. S. C. § 157( c)( 1). In these circumstances the bankruptcy judge does not enter a final judgment but instead submits proposed findings to the district court. Id. This is advantage because if the claim falls under a noncore proceeding and the bankruptcy judge issues an unfavorable proposed finding, then there may be an avenue to get a favorable judgment through the district court. The question here is whether or not there is a process to object to the proposed findings similar to the process to objecting to a magistrate’ s Order. Local court rules likely answer this question.
Insulating Your Claim from a Potential Bankruptcy Discharge
Crafting pleadings seem to be about the last thing that ignites any lawyer’ s hot love of the law. I suppose number paragraphs in a complaint just don’ t add the same irresistible curve and spice as a block quote lurking in the middle of a brief.
However, when planning civil litigation against an opponent who is an individual or is a small business with a decent possibility of filing for bankruptcy protection 11 U. S. C. § 523 is critical to know. Section 523 sets forth the exceptions to a bankruptcy discharge the most famous of which right now is § 523( a)( 8) applying to student loans. But it also sets forth many other exceptions such as for a tax or custom’ s duty or a domestic support obligation. See 11 U. S. C. § 523( a)( 1) and( a)( 5) respectively.
What may be a bit more important to civil litigation are the exceptions for anything obtained by false pretenses, false representations, and fraud. See 11 U. S. C. § 523( a)( 2) and( a)( 4). For example, if you can plead a fraud based claim under either the Racketeer Influenced and Corrupt Organizations
Act( 18 U. S. C. § 1961 et seq.) or common law fraud great factors to consider are which claims may be easier to keep alive against motions to dismiss or summary judgment, which are easier to prove, and which are more likely to result in a judgment? The foregoing analysis should flank any strategy against an opponent with a strong possibility of filing for bankruptcy protection.
Envisioning the Battle Lines for Success
Bankruptcy does not necessarily mean death for a claim against an opponent. It means greater strategy and greater planning around the bankruptcy jurisdiction and its exceptions.
Understanding the nature of this jurisdiction may help to keep a claim that you are litigating out of a bankruptcy court or help it to survive a bankruptcy discharge.
National Association of Consumer Bankruptcy Attorneys Spring 2017 CONSUMER BANKRUPTCY JOURNAL 19