Interpreting the Bankruptcy Code

The United States Bankruptcy Code is a section of federal law written by Congress. These laws are found in Title 11 of the United States Code, and are divided into nine “Chapters” to address the differing concerns of insolvent individuals, corporations, farmers, local governments, and cross-border insolvency cases. Only federal courts can hear and decide bankruptcy cases, and these courts are directed to apply the Bankruptcy Code by first looking to the “plain meaning” of the section of federal law. Congress is presumed to “say what it means and mean what it says” when it comes to writing laws.

Unfortunately, laws and language are sometimes ambiguous, especially when applied to the facts of a case. When the law is ambiguous, courts are directed to look to the history of the law to determine the intent of Congress. The interpreting court will examine the use of “the language itself, the specific context in which that language is used, and the broader context of the statute as a whole.” Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997). Supreme Court Justice Antonin Scalia once said, “the meaning of a word cannot be determined in isolation, but must be drawn from the context in which it is used.”

Judicial interpretation of the Bankruptcy Code creates inequality and uncertainty in bankruptcy cases. Federal courts are obligated to follow the direction of the Federal Court of Appeals of the federal judicial circuit in which are located. There are thirteen of these judicial circuits across the county, and they do not always agree in the interpretation of the Bankruptcy Code. For instance, the Ninth Circuit, which includes western states, does not always agree with Fifth Circuit, which is made up of Texas, Louisiana, and Mississippi.

When Federal Circuits disagree on the interpretation of the Bankruptcy Code, the matter could be appealed to the United States Supreme Court for an ultimate and final interpretation that is applied to all Federal Circuits. As the highest court of the land, the Supreme Court is very busy and cannot resolve every disagreement of interpretation. Consequently, there are many different applications of the federal law in Bankruptcy Cases.

If you need relief from the federal Bankruptcy Code, discuss your case with an experienced bankruptcy attorney in your area. Your attorney can explain how the courts in your area will apply the federal law to your case. Knowing how the laws are interpreted allows your attorney to protect your property and avoid complications in your case.