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