US Bankruptcy Legislation: An Attempt to Individual Debtor’s Civil Liberties?
US Bankruptcy Procedures
Beginning in the late 1800s, bankruptcy legislation in the United States evolved to permit debtors to reimburse their unsecured debts to be exonerated from that liability if they were eager to liquidate asset in order to reimburse certain creditors. Both the federal bankruptcy Act and each state’s laws authorized a debtor’s family to preserve a minimum standard of living. The states’ immunity laws differed in the amount of property it authorized a debtor to keep, but all-purpose was to facilitate debtors to find a ‘fresh start.’
Lawsuit for the collection of debts was practically inexistent. Under modern statutory systems of procedure, lawsuit for the set of sum unpaid may be divided for convenience of debate into several categories, depending on the nature of the liability. If the liability occur out of an ordinary business or commercial transaction, the creditor’s remedy against the defaulter for failure to reimburse is to convey an action for infringe of contract; for certain common forms of infringes of contract, such as the failure to pay a negotiable apparatus or to pay for goods bought, highly simplified actions often are endowed with. When the debt is opened by a credit on the debtor’s property, the creditor’s remedy –when the debtor fails to forfeit a repayment of interest or principal –is foreclosure of the credit. If the money owing, regardless of how it arose initially, is in arrears because of the judgment of a court, the judgment creditor may summon such judicial officers as the sheriff or marshal to assist in collecting the money due from the debtor’s possessions by attachment or garnishment. Incarceration of debtors, once common, is now usually considered too radical a remedy except for where there has been false pretences, fraud, or wilful failure to pay wages, or concealment of assets from pursuit by a judgement creditor.
Under current practices, the Constitution of the United States authorizes Congress ‘to establish uniform laws on the subject of bankruptcies throughout the United States’ (Article I, Section 8). This grant of power to Congress has been interpreted to prevent the state to write their entity bankruptcy laws.
Individual Debtor’s Civil Rights Status under Current Bankruptcy Legislation
US new bankruptcy laws arouse questions as to whether or not individual debtors were subject to inequity and partiality. The Bankruptcy Abuse Prevention and Consumer Protection Act, which is the most recent update to federal bankruptcy legislation, makes it even more difficult for individual debtors to file for bankruptcy under Chapter 7 of the bankruptcy code. This Chapter allows individual debtors to settle or reduce some debts in exchange for paying some properties. Individual debtors wanting to file under Chapter 7 must now meet extra-stringent criteria, which are determined by the median income in the state in which the debtor lives. Individual debtors who fail to qualify for Chapter 7 have no other option than filing for bankruptcy under Chapter 13. This requires refund of debts at a fixed sum per month over a period of three to five years.
The new legislation, which was signed in April 2005 by President George W. Bush, had the support of the credit card and retail industries, but was opposed by several leading consumer groups and bankruptcy attorneys, who argue that the law penalized people facing unusual circumstances. According to studies, most bankruptcy filings under Chapter 7 stem from medical emergencies, sudden lost of a job, or family break up. But supporters of the new law stipulate that it would hold people accountable for their debts and put off misuse by gamblers and obsessive purchasers.
According to critics, the 2005 legislation imposes obligations on bankruptcy attorneys that would result in higher legal fees for those asserting bankruptcy.
The new bankruptcy law requires that anyone in quest of declaring bankruptcy must first take a credit counselling course as this is valuably onerous for low-income homes.
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Personal bankruptcy is a legal way to give people with overwhelming debt a fresh financial start. Many people do not realize that there are five types of bankruptcy options available under the U.S. Bankruptcy Code; however, for most consumers there are really only two viable options; Chapter 7 and Chapter 13 bankruptcy.
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Students from both private and public universities all over the country may also provide low cost or free advice. The sessions will only achieve directing clients to the right legal path in filing the right papers. Note that with the new bankruptcy laws taking into effect making the bankruptcy filing process more difficult than usual, an experienced bankruptcy attorney will be worth your money.
Many people who enter the bankruptcy process worry about the fate of their credit. This is actually unnecessary as the bulk of credit damage happens before the bankruptcy process is even initiated. While no one wants the added hassle of rebuilding their credit after resolving debt troubles, doing so can put you leaps ahead of others in the credit game.
Americans are now filing Chapter 7 or 13 Bankruptcy to get their debts under control. Bankruptcy in itself is designed for debt elimination. Chapter 7 bankruptcy functions to cancel out unsecured debt such as utility or medical bills, credit card, etc. Chapter 13 Bankruptcy on the other hand is designed to give individuals more time in repaying all their debts.
Filing for bankruptcy is good news whenever you are struggling with your credit card debt, mortgage or medical bills. Bankruptcy laws help families and individuals in their debt struggles. You have two options on how to deal with your debt problems, Chapter 7 (debt elimination) and Chapter 13 (reorganization). Always remember that you can regain credit again after successfully filing your bankruptcy.
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