Jump to Navigation

Why is bankruptcy handled by federal courts?

Like many of the laws that currently govern New Yorkers and other Americans throughout the nation, bankruptcy laws are originally based on ideas from British governance. According to the Federal Judicial Center, the first bankruptcy laws and procedures established in this country were set in 1800 and allowed business people to be held accountable for their debts at the request of their creditors. It was not until reforms in 1841 that debtors could file for bankruptcy support themselves.

Debtors and creditors could file for bankruptcy in federal courts due to the United States Congress' power to establish consistent national bankruptcy laws per its mandate in Article I of the Constitution. Federal powers to hear bankruptcy and related matters were expanded in 1867. This expansion permitted federal courts to adjudicate not only bankruptcy matters but also those legal disputes that arose tangentially to the bankruptcy cases.

Over the next 100 years, the United States Congress increased and reduced the federal courts' power to hear matters related to active bankruptcy proceedings. However, in 1978, the Bankruptcy Act codified the federal courts' power to hear and decide matters that arose under bankruptcy cases. Only four years later, a case reached the United States Supreme Court that determined that the Bankruptcy Act reached too far. Federal bankruptcy courts could no longer decide matters based on state laws that were not sufficiently related to the underlying bankruptcy cases.

As it stands, federal courts still hear individual and business bankruptcy matters but are limited in their abilities to adjudicate certain related matters based on state law. Readers of this blog may have more questions about how their bankruptcy and related matters will be treated in the state courts of New York and the federal courts of the district. To have specific legal questions addressed, please consider seeking individual legal advice about any outstanding debt or bankruptcy problems.

No Comments

Leave a comment
Comment Information
Subscribe to This Blog's Feed

CONTACT US

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

FindLaw Network

Location

Law Office of Ronald V. De Caprio 65 West Ramapo Road Garnerville, NY 10923 Phone: 845-406-4201 Toll Free: 866-936-8113
Map & Directions