In most consumer bankruptcies (i.e., non-business bankruptcies), there will be no adversary proceedings, challenges to discharge, or other contested issues and in turn, no issues for you or anyone else to appeal.  However, every case is unique, and any bankruptcy could require the bankruptcy court to rule upon certain issues.  If a party in interest such as the debtor, a creditor, or the bankruptcy trustee disagrees with the bankruptcy judge’s decision, they are often able to appeal much like any other civil action.  Certain cases are more likely than others to generate appeals, such as cases where the debtor is attempting to discharge student loans, where a credit card company challenges the discharge of a debt based on fraud, or where the trustee seeks to undo a preference or “insider” payment.   Appeals can also arise from cases when a debtor seeks Chapter 7 protection but does not clearly pass the means test.

Bankruptcy appellate procedure is often not well understood, in part because the procedure is not the same throughout the United States (some may find this surprising since we only have one Bankruptcy Code throughout the United States).  Some parts of the country use a Bankruptcy Appellate Panel (abbreviated BAP), which is a group of judges from the United States bankruptcy courts who are appointed to hear appeals from certain bankruptcy cases,  under the supervision of the U.S. Courts of Appeals.  Not all of the federal judicial circuits have Bankruptcy Appellate Panels. As of 2008, the only judicial circuits which have convened these panels are the First, Sixth (which includes Michigan, where our firm practices), Eighth, Ninth, and Tenth Circuits. Those circuits which chose not to establish panels would have bankruptcy appeals heard by the United States district courts.

Even within our state, Michigan, bankruptcy appellate practice is not uniform.  In appeals arising out of the Western District of Michigan, parties have the option of having their appeal determined either by the Sixth Circuit BAP or the district court. The Eastern District, on the other hand, does not utilize the BAP.  When a party intends to file an appeal from a bankruptcy court order in a circuit that has created a BAP (like the Sixth Circuit) and from a district that has authorized the BAP to hear appeals (like the Western District of Michigan), that party faces a choice. Either the party can pursue its appeal before the BAP, or they may elect at the time of filing to have the appeal heard by the district court.  The appellee (the person opposing the appeal) also faces a choice:  assuming that the appellant (the party who filed the appeal) does not chose to have an appeal decided by the district court, the appellee (or any other party) may elect to have the appeal heard by the district court within 30 days after service of the notice of appeal.  Parties in the Eastern District, where we practice, do not have such a choice; if a party wishes to appeal a bankruptcy court’s decision in our jurisdiction, they must take their case to the district court.

Most bankruptcies do not involve appeals.  However, your bankruptcy attorney should have at least a basic familiarity with how bankruptcy appeals work, just in case a difficult issue arises in your proceeding.

-Drew Broaddus