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  • Level: GCSE
  • Subject: Law
  • Word count: 1506

The process of Bankruptcy.

Extracts from this document...

Introduction

Research Paper Bankruptcy November 25, 2005 The process of Bankruptcy was put in to place in order to assist corporations and individuals the opportunity to discharge from unpaid debts. This research paper will discuss the history of bankruptcy and the new laws that changed the status of filing bankruptcy. The first identified bankruptcy law was passed in England in 1542 in order to give creditors a solution (other than imprisonment) against debtors who did not pay their bills. Under this law debtors were considered "quasi criminals" (Skeel) In 1570, England passed a second bankruptcy law that indicated the following: * Only a creditor could instigate a bankruptcy case, basically bankruptcy was involuntary for the debtor. * Only a merchant could be a debtor. (Ordinary people were being thrown in jail) * During the bankruptcy a commissioner seized the bankruptcy assets, sold and distributed them pro rata to the creditors. * At the end of the case, the debtor did not obtain a discharge of the balance; therefore creditor could continue their collection efforts. (History of Bankruptcy) In the next 100 years Parliament made many changes to this bankruptcy law, more so to let the commissioner take more of the bankrupt's assets and to increase penalties for noncompliance. A 1604 amendment allowed the debtor's ear to be cut off. ...read more.

Middle

(History of Bankruptcy) During the 1920's, the act was amended to add grounds for denial of discharge and debts excepted from the discharges. In 1938 Congress overruled American bankruptcy law. Even though most changes affected mainly business bankruptcies, this law also created Chapter XIII, the wage earners repayment plan. (Skeel) The next major change came in the Bankruptcy Act of 1978. It was amended in 1984 to add many new categories of non-dischargeable debts. The law has been maneuvered since then, however Congress has not changed the vital nature of bankruptcy in America for at least 100 years. (Skeel) However recently changes in bankruptcy law have emerged. The House of Judiciary Committee passed the senate version of the Bankruptcy Reform Act. (Boute) The law will not only stop many people from being able to qualify to file bankruptcy it will also increase the cost of legal representation. Since the law makes the debtor's attorney personally liable to creditors if there are errors or mistakes in the debtors paperwork. (Boute) This means that if the client is deceitful and lies or is incorrect by accident. The Attorney can be required to pay damages to the creditors. Given that scenario the attorneys may need to bare more expenses by hiring a private investigator, which the client will have to bear the extra cost. ...read more.

Conclusion

(Boute) In many states Florida, Boston, and several others around United States an increase of debtors lined up on the sidewalks and halls of the U.S. Bankruptcy clerk of court offices. In a last minute rush to file their claims before the tough bankruptcy law came into affect. The Florida claimants were the last among an estimated 10,000 South Floridians who filed for bankruptcy since October 1, 2005. (State receives) Research shows that about half the families in bankrupsy filing have serious medical problems. Two thirds of those who file have lost a job or small business. Twenty percent have just suffered a family breakup- a husband who disappeared, a wife who died, a family that separated by long distance. (North Carolina Statistics) Statistics in North Carolina 2002: Total Consumer Business Chapter 7 17466 17096 370 Chapter 11 144 17 127 Chapter 12 8 -- 8 Chapter 13 18764 18693 71 Total 36382 35806 576 (North Carolina Statistics) Some bankruptcy experts indicate that the new means testing will affect perhaps 5 percent of 15 present of filers. Bankruptcy is meant to provide legitimate relief for some overburden Americans. Unfortunately, some individuals have taken advantage of current law to avoid financial obligations. The new law will force more bankruptcy filers capable of repaying their debts to do so and not have them be relieved so easily. ...read more.

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