First of all, we should understand that the Bankruptcy Court is a Court of Limited Jurisdiction. Upon the commencement of a bankruptcy case the automatic stay goes into effect which has very wide implications. It is more comprehensive and overboard then any other civil litigation injunction. It stops all aggressive collection efforts launched or in action against you. The automatic stay is a mandatory injunction of the bankruptcy court that prevents to commencement or continuation of litigation against the debtor (person or entity that has filed for bankruptcy). The bankruptcy court, however, has limited subject matter jurisdiction. This means that there are certain subject matters that the bankruptcy court does not have jurisdiction over. For example, the bankruptcy court does not have jurisdiction to determine criminal, family law or probate matters, among others.
In addition, the statutory grant of jurisdiction to the Bankruptcy Code provides that the bankruptcy court does not have jurisdiction to enter final orders in personal injury or wrongful death matters. A bankruptcy judge has jurisdiction to make findings of facts and conclusions of law based on the record before the court, and based on this the United States District Court in the district where the bankruptcy case is pending has jurisdiction to enter final orders. In this regard a bankruptcy judge’s jurisdiction is similar to that of a United States Magistrate Judge (the underlying reason for this is the distinction made between judges appointed under Articles III and IV of the Constitution).
We are asked this question many times from clients and prospective clients in Las Vegas and surrounding areas is whether after filing bankruptcy some one will come search their house or apartment. The simple answer is may be. There is no likelihood but you may be ready. It has happened in quite few cases. For starters, the schedules and statement of financial affairs need to be answered completely and truthfully. There are currently many individuals serving time in federal penitentiary who have been convicted of “bankruptcy crimes” — such as concealing assets in connection with a bankruptcy case.
The bankruptcy trustee has the ability to obtain an order authorizing him or her to search the debtor’s house or apartment with the assistance of the United States Marshall — and break doors, locks and safes to conduct an investigation. Usually this type of order will be obtained on an ex parte basis — meaning without prior notice to you to prevent you.
2. Core versus Non-Core Matters & Abstention
The grant of jurisdiction to the Bankruptcy Court distinguishes between “core” and “non-core” matters. Core matters are generally those that intimately affect the administration of a bankruptcy case, or involved claims arising under bankruptcy law. Non-core matters include personal injury and wrongful death claims.