How Does The Bankruptcy Court Determine

During a debtor’s bankruptcy, they may be faced with one or more creditors bringing forth a claim along with a request for summary judgment. For example, a creditor may ask for permission to repossess a property or to have the automatic stay lifted. If the creditor has evidence that there is no way that the debtor can challenge the facts they are presenting, then the bankruptcy court may grant what’s called “summary judgment.”

Summary judgment basically says that the court does not need to try this issue and that the party winning the judgment has brought forth enough evidence that they should be granted judgment as a matter of law.

But before a bankruptcy judge can grant summary judgment they need to consider the following issues in the case:

  1. If the facts in the case are indisputable, the bankruptcy court can grant summary judgment. For example, if the creditor is claiming that the debtor is in possession of their property and all parties agree it is true, then it would be considered an indisputable fact.
  2. If they bankruptcy court has looked at all the facts in a way that is most favorable to the debtor, and the conclusion they draw is still in favor of the creditor, then they can grant summary judgment.
  3. Before granting summary judgment, the bankruptcy court must allow the debtor an opportunity to challenge the facts presented by the creditor. However, if they do not present evidence to effectively challenge the facts of the case, the bankruptcy court can proceed with summary judgment. For example, using the example from #2, if a debtor could prove that they in fact returned the property to the creditor, then summary judgment would not be granted to the creditor.