Bankruptcy By The Numbers: 11

(This is the first in my new series examining bankruptcy topics using the numbers that appear in the laws)

Most people, when thinking of the number eleven in relation to bankruptcy think of Chapter 11, the chapter that deals with the reorganization of businesses and individuals. But that isn't the “11” I want to cover today. Instead, let's talk about Title 11.

This Code goes to eleven...

This Code goes to eleven...

The United States Code (the big book of laws for the U.S.) is divided into titles, and the Bankruptcy Code falls in Title 11 (Criminal statutes are in Title 18, e.g.). The main upshot of this is that bankruptcy is federal law. In fact, the Constitution of the United States specifically states that bankruptcy laws are the sole province of the federal government.

Being a federal law, the application of the law should be uniform no matter the state or district it is being practiced in. There are variances in local rules and procedures that make differences in the way the law is administered, but for the most part what you get in one district is pretty close to what you will get in another.

The federal nature of bankruptcy also means that if you file a bankruptcy, your interactions with the court will occur at the appropriate federal courthouse, and not at the county court. The bankruptcy judges are federal judges, appointed and not elected (they are different than a District Court judge, in that their appointments are for 14 years and not for life, but that is a different column). Appeals from bankruptcy court go through the Circuit Courts of Appeal to the U.S. Supreme Court, whose decisions are binding on all bankruptcy courts.

There is one area of bankruptcy law where almost all debtors have to deal with state law, at least indirectly: Exemptions. Congress gave the states the ability to “opt out” of using the federal property exemptions (11 U.S.C. § 522) to use the exemption laws provided by the state legislature. Many states have done this and allow only the use of state exemptions, others use exclusively the federal exemptions, and some allow a debtor in bankruptcy to choose between the two systems.

It is therefore important that your bankruptcy attorney understand not only the federal laws governing bankruptcy, but have expertise in understanding the state laws that interact with (and in some cases supplant) the bankruptcy code.  An experienced local attorney is your best bet.