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

Find out about the federal law and procedural rules used in bankruptcy cases.

When you file for bankruptcy, you won’t go to the local state courthouse. To start your case, you’ll submit the official bankruptcy paperwork to the clerk at the federal court. Why? Bankruptcy is a process governed by federal bankruptcy law.

For instance, the law allowing for a Chapter 7 or Chapter 13 bankruptcy is found in the bankruptcy code (Title 11 of the United States Code). The Federal Rules of Bankruptcy Procedure provide instructions that help the courts carry out the bankruptcy law.

The Bankruptcy Code

The purpose of bankruptcy is to give a filer a fresh financial start by canceling out debt owed by a debtor (the filer of the case) to a creditor. In exchange, the debtor agrees to give up property or income that isn’t needed to maintain employment and a modest home. Any excess gets distributed to creditors. The law that allows this process is in the bankruptcy code.

Among other things, the bankruptcy code defines:

The bankruptcy code is divided into chapters. The first three chapters apply to all cases regardless of type:

  • Chapter 1 - general provisions
  • Chapter 3 - case administration
  • Chapter 5 - creditors, the debtor, and the estate

Each of the remaining chapters covers just one type of bankruptcy:

  • Chapter 7 - straight or liquidation bankruptcy
  • Chapter 9 - reorganization for municipalities
  • Chapter 11 - reorganization for business or individuals
  • Chapter 12 - reorganization for family farmers and fishermen
  • Chapter 13 - reorganization for individuals with monthly payment plan
  • Chapter 15 - ancillary and other cross-border cases

You’ll find an online copy of the bankruptcy code on the Cornell Law School website.

The Federal Rules of Bankruptcy Procedure

Virtually every court system in the country—federal, state, or otherwise—has a system of rules explaining how a case should proceed. The Federal Rules of Bankruptcy Procedure implement the bankruptcy code.

Congress gave authority to the Supreme Court to write the rules that govern the procedure of bankruptcy cases. According to Rule 1001, the rules are intended to “…be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every case and proceeding.”

You can find a copy of the Federal Rules of Bankruptcy Procedure on the U.S. Courts website.

How the Bankruptcy Code and Federal Rules of Bankruptcy Procedure Work Together

The Supreme court designed the rules to implement code sections. The rules explain how the parties should conduct the case. For instance, the following rules create a uniform system that all courts follow when accepting a bankruptcy case:

  • Rule 1002. Commencement of the Case. The debtor files a petition and designates a particular chapter.
  • Rule 1005. Caption of Petition. Every document filed in the case must include the court name and location, and the debtor’s name.
  • Rule 1006. Filing Fee. Every petition must be accompanied by a filing fee, an application for a waiver, or an application to pay the fee in installments.
  • Rule 1007. Lists, Schedules, Statements, and Other Documents; time limits. Explains the documents that must accompany the petition and the deadlines for filing them.
  • Rule 1008. Verification of Petitions and Accompanying Papers. Filed papers must be verified with an oath or unsworn declaration.

When the rules conflict with the bankruptcy code, the bankruptcy code will prevail.

Local Bankruptcy Rules

The bankruptcy court in each federal district has authority to enact rules for the district. These rules often address procedures for bringing certain types of motions before the court, entering orders, setting briefing schedules, and filing local forms required in that jurisdiction.

Judge-Specific Bankruptcy Guidelines

Sometimes referred to by bankruptcy lawyers as the “local-local rules,” most bankruptcy judges have their own rules of conduct in their courts. These often articulate the judge’s personal preferences for conducting hearings, policies for handling emergency motions, telephone and video hearings, interaction with court staff and other issues.

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