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What is the Rooker-Feldman Doctrine and How Does it Apply to Bankruptcy?

Posted on Jan 11, 2013 in Bankruptcy, Bankruptcy Information, Illinois, Legal, Wisconsin

Most rulings come from state courts, not from federal courts.  State courts hear all sorts of claims, from criminal claims to civil claims to foreclosures in “equity”.

We don’t always like the outcomes, and occasionally judges do make errors in their rulings or rule based on information that later turns out to be wrong.  So what can we do in Bankruptcy Court about it?

The Rooker-Feldman doctrine, based on two Supreme Court cases, says federal court s (like bankruptcy courts) can’t sit as appellate courts for state court decisions we don’t like.  If a trial court judge in the Circuit Court of Ozaukee County, Wisconsin rules against a client and says a foreclosure is proper, we can’t appeal that decision in Bankruptcy Court.  It’s a final order and would have to be appealed in state court.

This is very important because many people look to not only file for bankruptcy, but also to ask the judge to avoid a mortgage or cancel a judgment that could turn into a non-dischargeable debt.  In many cases, these decisions come when clients, who can’t afford to hire lawyers to investigate and defend them adequately, are held in default or easily lose in summary judgment.

This is why the first level is so important and why, if the client wants to fight their case in Bankruptcy Court, lawyers must make sure there isn’t a final judgment to try and set aside.

The moral of the story:  Fight early or else you might not get to fight at all.

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