In the American legal system, a bankruptcy court is a court which specializes in bankruptcy cases. In other legal systems, bankruptcy is usually handled in a generic court, but in the United States, the vast majority of bankruptcies are heard and settled in a bankruptcy court. This is designed to streamline the process for declaring bankruptcy in the United States, and to ensure that the complex bankruptcy code is enforced by knowledgeable judges.
Bankruptcy courts are federal courts, and while bankruptcy cases can theoretically be heard in district courts, many district courts refer these cases to a bankruptcy court. In most cases, the court has what is known as a standing referral order in place, which means that all bankruptcies go straight to bankruptcy court, without even appearing in a district court. Judges in bankruptcy courts are appointed by the United States Court of Appeals for 14 year terms. Bankruptcy Appellate Panels (BAP) comprised of appointed judges can hear appeals from people who disagree with decisions handed down by a bankruptcy court.
This system was established in 1979, as part of the part of the reworking of Title 11 of the United States Code, also known as the Bankruptcy Code. People and companies who wish to declare bankruptcy must present their case in a bankruptcy court, and if they satisfy the terms of the Bankruptcy Code, the judge can approve the bankruptcy proceedings. Numerous reforms to Title 11 of the United States Code have made declaring bankruptcy increasingly difficult in the United States, in response to pressure from the financial industry.
Most people do not plan on becoming familiar with the process involved in declaring bankruptcy, and people facing financial ruin tend to retain a lawyer to help them navigate the bankruptcy process. Lawyers can determine which section of the Bankruptcy Code is relevant to the case, and they can also represent their clients in a bankruptcy court. Some lawyers specialize in this type of work, while others offer a range of legal services related to finances.
Like other courts of law in the United States, the proceedings in a bankruptcy court are carefully mandated by law, and the court environment is supposed to be as neutral as possible. All of the individuals present are expected to behave respectfully to the judge and other people in the courtroom, as a mark of respect for the sanctity of the court. Respectful behavior is not limited to the rules of common courtesy: people in court are also expected to dress well and to present a neat appearance, no matter how tattered their finances may be.