Abridged Discussion Of A Comprehensive Bankruptcy Law

Bankruptcy Law: Abridged discussion of a Comprehensive Law

The purpose of bankruptcy is to alleviate the heavy debt load of a debtor and allow a fresh financial start. Under circumstances where creditors are seeking repayment from an individual or business and the debtor is not in the financial position to pay, the Bankruptcy and Insolvency Act affords them the opportunity to voluntarily enter into bankruptcy.

During the 1800s the enactment of federal bankruptcy laws were temporary responses to poor economic conditions. The first official bankruptcy law was enacted in 1800 and repealed in 1803, the enactment of the second bankruptcy law several years later in 1841 was quickly repealed by 1843, both of these bankruptcy laws only allowed for

Of course the benefits of the bankruptcy laws as we know them today, are the result of several modifications to the law. Markedly, The Bankruptcy Act of 1898 was the first to provide companies in distress protection from creditors. Significantly, in response to the economic conditions brought on by the Great Depression, the U.S. Supreme Court, in 1934, stipulated that the primary goal of bankruptcy laws was to offer debtors a “fresh start”. Decades later, on October 1, 1979, the Bankruptcy Reform Act of 1978 took effect, overhauling practices and creating a durable business reorganization Chapter (Chapter 11 to replace Chapters X, XI and XII) and a more powerful personal bankruptcy chapter (Chapter 13 to replace Chapter XII). The Bankruptcy Reform Act of 1978 continues to serve as the uniform federal law governing bankruptcy cases today, although there have been several amendments and judicial clarifications to-date. Ultimately, the amendments to the law continue to work toward maintaining the integrity of the policy while simultaneously providing protections for both the debtor and the creditor (Brief

Bankruptcy cases cannot be filed for in state courts; there are 94 federal judicial districts, each handle bankruptcy matters. Reason being that, Congress passed the Bankruptcy Code under its constitutional grant of authority to "establish... uniform laws on the subject of Bankruptcy throughout the United States." States may not regulate bankruptcy, but they may pass laws that govern other aspects of the relationship between the debtor and creditor (Cornell Law). Congress established the U.S. Trustee Program, a national program with broad administrative, regulatory, and litigation/enforcement authorities whose mission is to promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders–debtors, creditors, and the public (Justice). Additionally, Congress authorized the U.S. Supreme Court to disseminate the Federal Rules of Bankruptcy Procedure.

Bankruptcy Laws are extensive, therefore the law accounts for varying types of debtors and creditors, qualifications, reorganization and/or repayment, payment priorities, and exceptions to discharge. These differences are outlined in different sections of The Bankruptcy and Insolvency Act. For