Going through a bankruptcy can be complicated. It is useful to understand what you can expect from the litigation process. At The Dellutri Law Group, PA, we have the bankruptcy law experience that you can trust. Our firm represents individuals in bankruptcy cases all throughout the State of Florida, including Chapter 7 bankruptcy and Chapter 13 bankruptcy. Our Florida bankruptcy lawyers can explain what you should expect in court in bankruptcy litigation.
What to Know About the Role of Bankruptcy Litigation
As a starting point, it is important to understand that most bankruptcy cases (of all types: Chapter 7 and Chapter 13) do not involve formal litigation. Instead, many bankruptcy cases proceed through the administrative process without any real dispute between the debtor and creditors. After a bankruptcy petition is filed, the debtor must submit financial schedules, disclose assets and liabilities, and attend the meeting of creditors conducted (11 U.S.C. § 341). If creditors and the bankruptcy trustee do not challenge the debtor’s disclosures or the treatment of debts, the case may move forward without contested hearings. In other words, litigation can be avoided.
Why there be Bankruptcy Litigation: Litigation arises when a party disputes an issue in the case. A creditor may challenge the discharge of a particular debt, object to the debtor’s claimed exemptions, or seek relief from the automatic stay. A trustee may also initiate litigation to recover assets or unwind improper transfers.
Understanding Jurisdiction: Bankruptcy Litigation is a Federal Matter
Bankruptcy litigation occurs within the federal court system. Indeed, federal district courts have original jurisdiction over bankruptcy cases and proceedings. District courts typically refer these matters to the United States Bankruptcy Court for the applicable district. In Florida, bankruptcy cases proceed in the U.S. Bankruptcy Courts for the Northern, Middle, or Southern District of Florida. The court will depend on your county of residence. Notably, bankruptcy cases often begin as an administrative proceeding involving schedules, creditor notices, and financial disclosures. As noted previously, formal litigation can be avoided if no dispute ever arises between the debtor and any other party. However, creditors, trustees, or other interested parties may challenge the debtor’s actions or the treatment of certain debts. When that occurs, the matter moves from routine administration into formal litigation before the bankruptcy court.
Adversary Proceedings Function Like Federal Civil Lawsuits
Many bankruptcy disputes proceed as adversary proceedings. These proceedings resemble traditional federal civil litigation. The process begins when a party files a complaint in the bankruptcy court, identifying the legal claims and the relief requested. Common adversary proceedings include:
- Disputes regarding the dischargeability of certain debts;
- Allegations of fraudulent transfers; and
- Efforts by a trustee to recover property for the bankruptcy estate.
A Contested Issue in Bankruptcy Does Not Always Mean Full Litigation is Required
It is important to clarify that not every bankruptcy dispute requires a full adversary proceeding. Quite the contrary, many conflicts arise through contested matters. These are disputes that are presented by motion rather than a formal complaint. Some examples include:
- Objections to claims filed by creditors;
- Motions seeking relief from the automatic stay; and
- Disputes over the use of the property of the estate.
Discovery and Motion Practice Shape the Bankruptcy Litigation Process
Bankruptcy litigation typically includes discovery and motion practice similar to other federal cases. The Federal Rules of Bankruptcy Procedure incorporate many provisions from the Federal Rules of Civil Procedure. These rules allow the parties to request documents, serve interrogatories, and conduct depositions to obtain evidence. Discovery becomes particularly important in cases involving alleged fraud, hidden assets, or disputed financial transactions. Trustees and creditors may investigate whether the debtor transferred property before filing bankruptcy or concealed assets that should belong to the bankruptcy estate. If you have any questions about discovery, an experienced Florida bankruptcy attorney can help.
Bankruptcy Trials Focus on Financial Records and Credibility
When a dispute cannot be resolved through motion practice, the bankruptcy court will conduct a trial. Bankruptcy trials typically focus on financial records, business transactions, and the debtor’s financial conduct before the filing of the bankruptcy case. Trustees and creditors often rely on bank records, accounting documents, contracts, and communications to establish their claims. Ultimately, the bankruptcy judge serves as the trier of fact in most cases. Unlike many civil cases in state court, bankruptcy trials generally do not involve juries. The judge hears testimony, reviews documentary evidence, and issues findings of fact and conclusions of law.
We are Leaders in Bankruptcy Litigation in Florida
Bankruptcy can be stressful, confusing, and even overwhelming. Ultimately, bankruptcy is a tool that people and businesses can use to resolve financial problems and move forward to a place of stability. At The Dellutri Law Group, PA, we have the skills to handle even the most complex of bankruptcy cases, including those where litigation is required. Your initial consultation with our Florida bankruptcy lawyer is fully confidential and carries no further legal obligations.
Speak to Our Florida Bankruptcy Attorney Today
At The Dellutri Law Group, PA, our Florida bankruptcy lawyers have the knowledge and experience to represent you in litigation. If you have any questions or concerns about the bankruptcy litigation process, we are here to help. Please do not hesitate to contact us today for a free, no-strings-attached consultation. We provide solutions-focused bankruptcy representation in Florida.