Can You Appeal a Bankruptcy Court Decision?

 

Yes, it is possible to appeal a decision of the Bankruptcy Court.

However, if you had the impression that filing for Chapter 7 or Chapter 13 bankruptcy in Michigan is simple form-filling, you may be surprised to learn that the Bankruptcy Court issues decisions in the first place. Or that disputes arise after the “forms are filed.”

Or that a bankruptcy case can go very wrong for you if filed improperly or for the wrong reasons.

This Article will discuss the function and process of the Bankruptcy Court. It will explore the  circumstances in which you can land in front of a Bankruptcy Court judge. Finally, and most importantly, this Article will review your options for filing an appeal of that judge’s decision if you perceive it to be incorrect.

First, what is the Bankruptcy Court, exactly?

 

The US Bankruptcy Court: Federal Administrative Courts

 

Bankruptcy is a Federal legal proceeding. This is one of the reasons that its Automatic Stay and discharge injunctions are effective in eliminating debt. Most promissory notes and other instruments from which debt arises are functions of state law.

When a bankruptcy is filed in Michigan, it is thus filed not with a Wayne County or Oakland Court. It is filed with in either Eastern District or Western District of Michigan Federal Bankruptcy Court.

Your 341 Meetings and other contested bankruptcy hearings are held in Federal Court locations in Detroit, Ann Arbor, Flint, Bay City, Grand Rapids, Lansing, Kalamazoo, or Traverse City. They are not held in your local Michigan district or county circuit court.

Article I of the US Constitution provides Congress with the authority to establish laws concerning bankruptcy throughout the United States.

Congress thus enacted the US Bankruptcy Code as Title 11 of the US Code.

This means that Bankruptcy Judges are not “Article III” judges. That is, they are not judges whose powers are codified in Article III of the Constitution, as is the Federal judiciary. Their decisions, therefore, are appealable—to the Federal District Courts and/or to Bankruptcy Appellate Panel (“BAP”) of the Sixth Circuit Court of Appeals.

How and when can you then appeal a Bankruptcy Judge’s decision?

The procedure involved will vary from jurisdiction to jurisdiction. This Article focuses on the Eastern District of Michigan Federal judicial district, which sits within the purview of the Sixth Circuit Court of Appeals.

 

An Overview of Eastern District of Michigan Bankruptcy Court Appeals

 

The Eastern District of Michigan Bankruptcy Court has jurisdiction over bankruptcy cases filed in Genesee, Lapeer, Lenawee, Livingston, Macomb, Monroe, Oakland, St. Clair, Washtenaw, and Wayne  County.

If you have filed a motion or adversary proceeding (“AP”) within your  Chapter 7 or Chapter 13 bankruptcy or you have had a creditor or other party file a motion or AP against you in your bankruptcy case, you will litigate that issue before the Eastern District of Michigan Bankruptcy Court.

Your hearing will be held in either Detroit, Flint, or Bay City.

As in any other litigation, you will engage in phases of discovery, documentation production, preliminary and evidentiary motion prosecution, brief and response drafting and filing, and, ultimately, oral argument before your bankruptcy judge.

This may go well for you—or it may not.

If does not, you may want to appeal the decision onward.

 

Types of Bankruptcy Appeals in the Eastern District of Michigan

 

What sort of matters can be appealed from decisions of a bankruptcy judge?

Generally, only a  “final” decision can be appealed. So-called “interlocutory” orders are not appealable. Interlocutory orders are those that do not conclude a case or question.

That said, some types of final decisions that can be appealed include:

 

• Appeals from Orders Dismissing Your Bankruptcy Case:

 

If the Bankruptcy Court dismisses your Chapter 7 or Chapter 13 case entirely, you may be able to appeal the decision.

 

• Appeals from a Ruling on a Chapter 13 Payment Plan:

 

If the bankruptcy court disapproves your Chapter 13 payment plan or approves it with a decision on a term of the plan with which you disagree, you may be able to appeal the decision.

 

• Appeals from a Ruling Regarding Your Discharge:

 

If the Bankruptcy Court denies your request for a bankruptcy discharge, you should be able to appeal the decision. (What is a more “final” decision in bankruptcy than this one?) Note that it is possible to complete a Chapter 13 bankruptcy proceeding with an entitlement to discharge. Thus, this question is not always a question of case dismissal.

 

• Appeals from Rulings on Bankruptcy Motions:

 

If the bankruptcy court grants or denies a motion in your bankruptcy case, you may be able to appeal the decision. Such motions, filed against you, may include decisions regarding the dischargeability of a specific debt or the liquidation of specific asset.

 

How To File a Bankruptcy Appeal in the Eastern District of Michigan

 

The Federal Bankruptcy Rules of Procedures and Local Court Rules of the Eastern District of Michigan govern the bankruptcy appeals process.

First, if you wish to appeal a bankruptcy court decision in the Eastern District of Michigan, you will need to file a notice of appeal with the bankruptcy court within 14 days of the decision.

A filing fee will also need to be paid. This amount varies depending on specific circumstances. You will also need to serve notice of the appeal to all parties with an interest in the litigation, as well as the United States Trustee.

The US Trustee is the division of the US Department of Justice tasked with maintaining the integrity of the bankruptcy system in the US. The US Trustee is always a “party in interest.”

From the Eastern District of Michigan Bankruptcy Court, a ruling or order may be appealed to either the Federal District Court or to the Sixth Circuit BAP. Appealing a ruling to the Federal District Court rather than the BAP carries additional timing and filing requirements.

Whichever forum you elect, that appeals court will review the case and issue a decision, which may affirm the Bankruptcy Court’s decision, reverse it, or send it back to the Bankruptcy Court for further proceedings.

Oral argument may or may not be requested by yourself—or by the appeals court. Many bankruptcy appeals are resolved without the need for further oral argument.

It is important to bear in mind that appeals courts are not “courts of first impression.” They are not fact-finders. Largely, they will review the pleadings and determine whether the Bankruptcy Court issued its decision in error on a legal basis alone.

 

Michigan Bankruptcy Court Appeals: The Bottom Line

 

If you have filed for bankruptcy in the Eastern District of Michigan, you may need to consider appealing a decision issued by your Bankruptcy Judge.

Better yet, avoid getting to that point in the first place by retaining an experienced Metro Detroit bankruptcy attorney to represent you.

Attorney Walter Metzen is a Board Certified Bankruptcy Expert who has successfully represented Metro Detroit Chapter 7 and Chapter 13 bankruptcy clients for over 30 years.

If you are considering filing for bankruptcy, contact us now to schedule your free initial consultation.