         
|
ABOUT BANKRUPTCY
Bankruptcy is federal law because Article I, Section 8 the United States Constitution authorizes Congress to adopt “uniform laws on the subject of Bankruptcies.” With the exception of the Internal Revenue Code, no federal law directly affects as many people and businesses as the Bankruptcy Code. And no area of bankruptcy law is more complex than consumer bankruptcy. One of the major purposes for this Web site is to help our clients, potential clients and the general public better understand the bankruptcy system. We will continue to improve this site in order to serve you better.
When Congress enacted the Bankruptcy Code in 1978, some 182,000 American families sought the protection of consumer bankruptcy—liquidating their assets and discharging their debts in a process then known as “straight bankruptcy” or adopting a plan approved by the bankruptcy court to repay their creditors at least in part over time. Since then, the U.S. population has grown 25 percent, while the total consumer credit outstanding rose more than five times, to $1.726 trillion in 2002. The bankruptcies filed in year 2002 totaled 1,577,651, more than an eight-fold increase over 1978 and a record high. The overwhelming majority (97.6%) of them were non-business filings.
There are many reasons for the enormous number of bankruptcy cases, such as economic recessions, loss of jobs, legalized gambling, credit solicitations, illness, changes in health insurance, divorce, garnishment, collection practices, or simply poor money management. People from all walks of life file bankruptcy, including bookkeepers, truck drivers, computer programmers, managers, department store clerks, loggers, executives, secretaries, accountants, plumbers’ assistants, consultants, postal workers, machinists, day care workers, flight attendants, dentists, steelworkers, teachers, and waitresses. They work for large companies, for small companies, for the government, for themselves, or for no one. They are single mothers, single fathers, married couples, big families, and small families.
Consumer bankruptcy has become part of America’s economic landscape. Once regarded as an unlikely legal alternative chosen by only a few desperate families, bankruptcy has become a refuge for one in every 50 American families.
The primary purposes of the law of bankruptcy are: (1) to give an honest debtor a "fresh start" in life by relieving the debtor of most debts, and (2) to repay creditors in an orderly manner to the extent that the debtor has assets or income available for payment. As the United States Supreme Court put it:
[I]t gives to the honest but unfortunate debtor . . . a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.
ACKNOWLEDGEMENTThe information on this page derives from the Final Report of the National Bankruptcy Review Commission, Federal Reserve Board, Administrative Office of the United States Courts,. and Statistical Abstracts of the United States (2001-2002 ed.)
Call (312) 294-4400 for a FREE consultation! |