Article III of the U.S. Constitution establishes the judiciary as one of the three separate as well as distinct branches of the federal government along with the legislative and executive branches. Federal courts are considered the guardians of the Constitution because their rulings help protect the rights as well as liberties as guaranteed by the Constitution. An independent judiciary is fundamental to obtaining fairness as well as justice for all citizens of the United States.
There are 94 federal judicial districts that have bankruptcy courts that handle all matters relating to bankruptcies. It is not possible to file a bankruptcy case in a state court, and bankruptcy laws help people that cannot pay their creditors get a new start through the liquidation of their assets in order to pay off their debts, or through the creation of a repayment plan.
Bankruptcy courts and laws work together in order to protect troubled businesses as well as helps in providing orderly distribution to business creditors through different means including reorganization or liquidation. The procedures that need to be followed in a bankruptcy court are covered under Title II of the Bankruptcy Code. Most cases that are filed fall under the three main chapters of the Bankruptcy Code and these are Chapters 7, 11 and 13.
The United States bankruptcy court is a federal court that deals with all manner of bankruptcy cases, and bankruptcy judges in each of the 94 federal judicial districts in regular active service constitute a “unit” of the applicable United States district court. Bankruptcy judges that preside over the bankruptcy court cases are appointed for a fourteen year term by the United States court of appeals.
In technical terms, the US district courts are authorized to handle bankruptcy cases, though each such district needs to refer bankruptcy matters to the bankruptcy court. Initially at least, all matters relating to bankruptcy are handled by the bankruptcy court.
However, if circumstances are unusual, the district court can withdraw the reference or take the bankruptcy case away from the bankruptcy court and decide upon the matter itself. Most of the bankruptcy matters are handled by a bankruptcy judge sitting in a bankruptcy court who may pass decisions on these matters which will be final except for appeals to the district judge who may review such decisions.