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Bankruptcy judges are judicial officers of the US District Court of Appeals. They are appointed by the court to preside over bankruptcy matters in their area and are appointed for a 14-year term. The number of bankruptcy judgeships is determined by Congress, which receives periodic advice from the Judicial Conference of the United States on the need for additional judges. As of September 2012, there were 350 bankruptcy judgeships.
Under the Bankruptcy Act of 1898, appointees by district judges served as referees and oversaw the administration of bankruptcy cases in the district courts. In 1973, the Supreme Court issued rules that recognized the importance of these judicial duties and applied the title of bankruptcy judge to these appointees. That same year, the congressionally chartered Commission on Bankruptcy Laws of the United States recommended the formal establishment of bankruptcy judgeships to preside over judicial proceedings related to bankruptcy in courts that would be independent of the U.S. district courts.
The Bankruptcy Reform Act of 1978 established bankruptcy courts in each judicial district, with bankruptcy judges appointed by the President of the United States and and confirmed by the Senate for terms of fourteen years. The act relieved the bankruptcy judges of the administrative duties of the referee system. Upon full implementation of the act in 1984, two bankruptcy judges were to serve on the Judicial Conference of the United States.
A Bankruptcy judge oversees all the legal actions in which a company or individual files for bankruptcy. There are specific rules and laws guiding what happens when an individual is unable to pay their debts. The bankruptcy judge enforces the laws and determines whether bankruptcy is the appropriate action, and what type of bankruptcy should be filed.
The bankruptcy judge will hear arguments from an attorney representing a person who wants to file for bankruptcy. The attorney must demonstrate that the person truly is bankrupt under the definition of the law. The judge will then evaluate the evidence to determine whether the person meets the definition of bankruptcy set forth by federal guidelines and determine whether the parties filed for the appropriate type of bankruptcy. He will do this by assessing their financial situation. For example, a person must have income below a certain level in order to qualify for a Chapter 7 bankruptcy.
The bankruptcy judge will then hear from the creditors who have a claim on the assets of the bankrupt person. The bankruptcy judge will decide how the assets, if any, are distributed to creditors, and what payment plans, if any, the debtor must follow. The law sets forth rules regarding who gets paid first, and the judge will determine who falls into each category under the rules, and how the assets and available payments should be distributed to those parties.
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